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Barnes Group Inc.$52.77$.33.63%

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 Barnes Group Inc. Reports Fourth Quarter and Full Year 2017 Financial Results
   Friday, February 16, 2018 6:30:00 AM ET

--Sales of $373 million, up 15% from last year’s fourth quarter; Organic Sales up 10%

--Operating Margin of 13.3%; Adjusted Operating Margin of 13.7%, down 230 bps

--GAAP EPS of ($1.10) including a $1.79 charge for new U.S. tax legislation

--Adjusted EPS of $0.71, up 6% versus prior year

--Full Year 2017:

--Sales of $1,436 million, up 17% from 2016; Full Year Organic Sales up 11%

--Operating Margin of 14.6%; Adjusted Operating Margin of 14.8%, down 120 bps

--GAAP EPS of $1.09 including a $1.77 charge for new U.S. tax legislation

--Adjusted EPS of $2.88, up 14% from 2016

--2018 Outlook:

--2018 Expected Sales Growth of 4% to 6%; Organic Sales Growth of 3% to 5%

--2018 Adjusted Net Income of $2.98 to $3.13 per Share; Up 3% to 9% from 2017 Adjusted Net Income of $2.88 per Share



Barnes Group Inc. (B ), a global provider of highly engineered products and differentiated industrial technologies, today reported financial results for the fourth quarter and full year 2017.

Fourth quarter 2017 net sales of $373 million were up 15% from $324 million in the prior year period driven by strong organic sales growth (1) of 10%. Foreign exchange favorably impacted sales by approximately 4% while acquisition sales contributed 1%. Net loss for the fourth quarter was ($59.2) million, or ($1.10) per diluted share, compared to net income of $36.7 million, or $0.67 per diluted share, a year ago. In the fourth quarter of 2017, the Company recorded a charge of $96.7 million related to the new U.S. tax legislation. On an adjusted basis, net income was $0.71 per diluted share, up 6% from $0.67 last year. Adjusted net income per diluted share in the fourth quarter of 2017 excludes a $1.79 charge related to new U.S. tax laws and $0.02 per share related to restructuring actions within our Industrial Segment. Fourth quarter 2016 adjusted net income per share excludes $0.03 of FOBOHA short-term purchase accounting adjustments in our Industrial Segment and a $0.03 benefit related to a contract termination dispute in our Aerospace Segment.

For the full year 2017, Barnes Group generated net sales of $1,436 million, up 17% from $1,231 million in the prior year. Full year organic sales were up 11%, while acquisitions contributed 5% and favorable foreign exchange provided 1%. Net income for the year was $59.4 million, or $1.09 per diluted share, compared to $135.6 million, or $2.48 per diluted share, a year ago. On an adjusted basis, net income was $2.88 per diluted share, up 14% from $2.53 last year. For 2017, adjusted net income per share excludes a $1.77 charge related to tax law changes, $0.03 of FOBOHA short-term purchase accounting adjustments and a $0.01 benefit from restructuring actions. Adjusted net income per share for 2016 excludes $0.05 of FOBOHA short-term purchase accounting adjustments and acquisition transaction costs in our Industrial Segment and a contract termination arbitration award which offset related charges in our Aerospace Segment.

A table reconciling 2017 and 2016 non-GAAP adjusted results presented in this release to the Company’s GAAP results is included at the end of this press release.

"Barnes Group delivered a strong 2017 with double-digit organic sales and adjusted earnings per share growth," said Patrick J. Dempsey, President and Chief Executive Officer of Barnes Group Inc. "Our sustained focus on enhancing our portfolio and pipeline of innovative products and services, advancing the Barnes Enterprise System ("BES"), and developing a high-performing global organization has resulted in continued progress along our transformation journey and positions us to perform well moving forward."

"Accordingly, we expect 2018 to be another solid year as generally favorable end markets coupled with our BES emphasis on driving commercial, operational and financial excellence across our Company are anticipated to drive revenue, margin, and earnings growth," added Dempsey.

Industrial

-- Fourth quarter 2017 sales were $254.3 million, up 18% from $215.7 million in the prior year period. Organic sales increased by 11%, with growth across all three business units; Molding Solutions, Nitrogen Gas Products, and Engineered Components. Favorable foreign exchange increased sales by approximately $13.1 million, or 6%, while acquisition revenues were $2.6 million, or 1%.

-- Operating profit in the fourth quarter was $26.9 million, down 11% from $30.2 million in the prior year period, as continuing higher costs incurred on certain programs within Engineered Components’ Associated Spring business and incentive compensation at select SBUs were only partially offset by the profit benefit of increased sales and the absence of $1.8 million in FOBOHA short-term purchase accounting adjustments taken last year. The fourth quarter of 2017 includes restructuring related costs of $1.4 million related to two previously announced plant consolidations. Excluding this item, adjusted operating profit was $28.3 million, down 12% from an adjusted $32.0 million a year ago. Adjusted operating margin was 11.1%, down 370 bps, driven by lower productivity, primarily at Engineered Components, and a low margin contribution from the FOBOHA business.

-- Full year 2017 sales were $973.9 million, up 18% from $824.2 million last year. Organic sales were up 10%, while acquisitions contributed 7% and favorable foreign exchange contributed 1%. Full year operating profit of $127.1 million was down 2% from $129.7 million in the prior year. On an adjusted basis, operating profit was $129.4 million for 2017 versus $133.2 million a year ago, a decrease of 3%. Adjusted operating margin was 13.3%, down 290 bps from last year.

Aerospace

-- Fourth quarter 2017 sales were $118.7 million, up 9% from $108.5 million in the same period last year. Aerospace original equipment manufacturing ("OEM") sales increased 6% due to the continuing ramp of new engine programs. Aerospace aftermarket sales increased 17% from continuing growth in maintenance, repair and overhaul ("MRO"), and spare parts sales.

-- Operating profit was $22.7 million for the fourth quarter of 2017, up 7% as compared to $21.1 million in the prior year period, reflecting the profit impact from higher sales volumes and productivity benefits, partially offset by scheduled price deflation. Excluding a contract termination award of $1.4 million in the fourth quarter of 2016, adjusted operating profit was up 15% from $19.8 million a year ago while operating margin of 19.1% was up 90 bps from an adjusted 18.2% a year ago.

-- Full year 2017 sales were $462.6 million, up 14% from $406.5 million last year. Operating profit was $83.2 million, up 33%, versus $62.5 million a year ago. Full year 2017 Aerospace operating profit was up 30% versus an adjusted $64.1 in the prior year. Operating margin was 18% versus an adjusted 15.8% last year, up 220 bps.

-- Aerospace OEM backlog ended 2017 at $714 million, up 14% compared to a year ago and up 1% sequentially from the third quarter of 2017. The Company expects to ship approximately 50% of this backlog over the next 12 months.

Additional Information

-- Full year 2017 interest expense increased $2.7 million to $14.6 million primarily as a result of a higher average effective interest rate versus a year ago.

-- Other income, net for the year decreased $2.3 million versus a year ago primarily due to the absence of $1.4 million of interest income related to the contract termination arbitration award in 2016.

-- The Company’s effective tax rate from continuing operations was 69.6% in 2017 compared with 25.7% in 2016. The increase in the 2017 effective tax rate is primarily due to a provisional $96.7 million income tax charge recorded as a result of the Tax Cuts and Jobs Act (the Act) enacted in December 2017. Excluding the impact of the Act, the Company’s 2017 effective tax rate would have been 20.2%. The comparable decrease from 25.7% to 20.2% is due to the adjustment of the Swiss valuation reserves worth $0.12 of earnings per share, the settlement of tax audits and closure of tax years for various tax jurisdictions, and the change in the mix of earnings. These items were partially offset by the expiration of certain tax holidays.

2018 Outlook

Barnes Group expects 2018 total revenue growth of 4% to 6%, with organic sales growth of 3% to 5%. Foreign exchange is anticipated to benefit revenues by approximately 1% for the year. Operating margin is forecasted to be in the range of 15.5% to 16.5%. Earnings are expected to be in the range of $2.98 to $3.13 per diluted share, up 3% to 9% from 2017’s adjusted diluted earnings per share of $2.88. Further, the Company anticipates capital expenditures of between $60 million to $65 million and cash conversion of greater than 100% of net income. Based upon our forecasted geographic mix of earnings, the effective tax rate for 2018 is expected to be between 25% and 26%. The Company does not expect the new Revenue Recognition standard to have a material impact on future revenues or net income.

"2017 was a good year for Barnes Group even as we dealt with some operational challenges within one of our Industrial businesses. As we move beyond this in the first half of 2018, we anticipate solid revenue growth, improved financial performance, and good cash generation. With our supportive balance sheet, we will continue to invest in organic growth opportunities and strategic acquisitions that position us well for the future," said Christopher J. Stephens, Jr., Senior Vice President, Finance and Chief Financial Officer, Barnes Group Inc.

Conference Call Information

Barnes Group Inc. will conduct a conference call with investors to discuss fourth quarter and full year 2017 results at 8:30 a.m. ET today, February 16, 2018. The public may access the conference through a live audio webcast available on the Investor Relations section of Barnes Group’s website at www.BGInc.com. The conference is also available by direct dial at (866) 393-4306 in the U.S. or (734) 385-2616 outside of the U.S.; Conference ID 3989187. Supplemental materials will be posted to the Investor Relations section of the Company’s website prior to the conference call.

In addition, the call will be recorded and available for playback from 12:00 p.m. (ET) on Friday, February 16, 2018 until 11:59 p.m. (ET) on Friday, February 23, 2018, by dialing (404) 537-3406; Conference ID 3989187.

Note: (1) Organic sales growth represents the total reported sales increase within the Company’s ongoing businesses less the impact of foreign currency translation and acquisition and divestitures completed in the preceding twelve months.

About Barnes Group Barnes Group Inc. (B ) is a global provider of highly engineered products, differentiated industrial technologies, and innovative solutions, serving a wide range of end markets and customers. Its specialized products and services are used in far-reaching applications including aerospace, transportation, manufacturing, healthcare, and packaging. Barnes Group’s skilled and dedicated employees around the globe are committed to the highest performance standards and achieving consistent, sustainable profitable growth. For more information, visit www.BGInc.com.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future operating and financial performance and financial condition, and often contain words such as "anticipate," "believe," "expect," "plan," "estimate," "project," and similar terms. These forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements. These include, among others: difficulty maintaining relationships with employees, including unionized employees, customers, distributors, suppliers, business partners or governmental entities; failure to successfully negotiate collective bargaining agreements or potential strikes, work stoppages or other similar events; difficulties leveraging market opportunities; changes in market demand for our products and services; rapid technological and market change; the ability to protect intellectual property rights; introduction or development of new products or transfer of work; higher risks in global operations and markets; the impact of intense competition; acts of terrorism, cybersecurity attacks or intrusions that could adversely impact our businesses; uncertainties relating to conditions in financial markets; currency fluctuations and foreign currency exposure; future financial performance of the industries or customers that we serve; our dependence upon revenues and earnings from a small number of significant customers; a major loss of customers; inability to realize expected sales or profits from existing backlog due to a range of factors, including changes in customer sourcing decisions, material changes, production schedules and volumes of specific programs; the impact of government budget and funding decisions; the impact of new or revised tax laws and regulations; changes in raw material or product prices and availability; integration of acquired businesses; restructuring costs or savings; the continuing impact of prior acquisitions and divestitures; and any other future strategic actions, including acquisitions, divestitures, restructurings, or strategic business realignments, and our ability to achieve the financial and operational targets set in connection with any such actions; the outcome of pending and future legal, governmental, or regulatory proceedings and contingencies and uninsured claims; product liabilities; future repurchases of common stock; future levels of indebtedness; and numerous other matters of a global, regional or national scale, including those of a political, economic, business, competitive, environmental, regulatory and public health nature; and other risks and uncertainties described in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by the Company, including, among others, those in the Management’s Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors sections of the Company’s filings. The Company assumes no obligation to update its forward-looking statements.

                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                     BARNES GROUP INC.
                                                                                                                                                                                                                                     CONSOLIDATED STATEMENTS OF INCOME
                                                                                                                                                                                                                                     (Dollars in thousands, except per share data)
                                                                                                                                                                                                                                     (Unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                    Three months ended December 31,                                                                                                                                                                                                                                                                                      Twelve months ended December 31,
                                                                                                           ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   2017                                                                                                                2016                                                                                            %                                                                                           2017                                                                                                                2016                                                                                                  %
                                                                                                                                                                                                                                                                                                                                                    Change                                                                                                                                                                                                                                                                                                                Change
                                                                                                           --------------------------------------------------                                                                  --------------------------------------------------                                                                  -------                                                                 --------------------------------------------------                                                                  --------------------------------------------------                                                                  -------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Net sales                                                                                                                     $    373,048                                                                                                        $    324,167                                                                                     15.1                                                                                       $  1,436,499                                                                                                        $  1,230,754                                                                                           16.7
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Cost of sales                                                                                                                      246,933                                                                                                             208,271                                                                                     18.6                                                                                            939,288                                                                                                             790,299                                                                                           18.9
Selling and administrative expenses                                                                              76,511                                                                        64,522                                                                  18.6                                                                         286,933                                                                       248,277                                                                        15.6
                                                                                                           -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------                                                                                                                                        -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                323,444                                                                       272,793                                                                  18.6                                                                       1,226,221                                                                     1,038,576                                                                        18.1
                                                                                                           -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------                                                                                                                                        -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Operating income                                                                                                                    49,604                                                                                                              51,374                                                                                     (3.4 )                                                                                          210,278                                                                                                             192,178                                                                                            9.4
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Operating margin                                                                                                                      13.3 %                                                                                                              15.8 %                                                                                                                                                                                      14.6 %                                                                                                              15.6 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Interest expense                                                                                                                     3,934                                                                                                               3,057                                                                                     28.7                                                                                             14,571                                                                                                              11,883                                                                                           22.6
Other expense (income), net                                                                                        (767 )                                                                                         (2,351 )                                                                                     NM                                                                               8                                                                        (2,326 )                                                                                           NM
                                                                                                           -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------                                                                                                                                        -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Income before income taxes                                                                                                          46,437                                                                                                              50,668                                                                                     (8.4 )                                                                                          195,699                                                                                                             182,621                                                                                            7.2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Income taxes                                                                                                    105,685                                                                        13,954                                                                    NM                                                                         136,284                                                                        47,020                                                                          NM
                                                                                                           -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------                                                                                                                                        -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Net (loss) income                                                                                                             $    (59,248 )                                                                                                      $     36,714                                                                    NM                                                                                       $     59,415                                                                                     $    135,601                                                                       (56.2 )
                                                                                                           -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------                                                                                                                                        -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Common dividends                                                                                                              $      7,509                                                                                     $      6,991                                                                   7.4                                                                                       $     29,551                                                                                     $     27,435                                                                         7.7
                                                                                                           -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------                                                                                                                                        -------------------- ---------- --------------------                                                                -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Per common share:
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
  Net (loss) income:
     Basic                                                                                                                    $      (1.10 )                                                                                                      $       0.68                                                                                       NM                                                                                       $       1.10                                                                                                        $       2.50                                                                                          (56.0 )
     Diluted                                                                                                                         (1.10 )                                                                                                              0.67                                                                                       NM                                                                                               1.09                                                                                                                2.48                                                                                          (56.0 )
  Dividends                                                                                                                           0.14                                                                                                                0.13                                                                                      7.7                                                                                               0.55                                                                                                                0.51                                                                                            7.8
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Weighted average common shares outstanding:
     Basic                                                                                                                      53,874,164                                                                                                          54,133,060                                                                                     (0.5 )                                                                                       54,073,407                                                                                                          54,191,013                                                                                           (0.2 )
     Diluted                                                                                                                    53,874,164                                                                                                          54,574,734                                                                                     (1.3 )                                                                                       54,605,298                                                                                                          54,631,313                                                                                           (0.0 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
NM - Not Meaningful
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                     BARNES GROUP INC.
                                                                                                                                                                                                                                     OPERATIONS BY REPORTABLE BUSINESS SEGMENT
                                                                                                                                                                                                                                     (Dollars in thousands)
                                                                                                                                                                                                                                     (Unaudited)
                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                    Three months ended December 31,                                                                                                                                                                                                                                                                                                                                  Twelve months ended December 31,
                                                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              2017                                                    2016                                                        %                                                                                                                  2017                                                      2016                                                                 %
                                                                                                                                                                                                                                                                                                                                                 Change                                                                                                                                                                                                                                                                                                                                                              Change
                                                                                       -----------------------------------------------                                                                  -----------------------------------------------                                                                  --------------------------------------------------                                                                    -------------------------------------------------                                                                  -------------------------------------------------                                                                  -----------------------------------------------------------------
Net sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
     Industrial                                                                                           $ 254,334                                                                                                        $ 215,682                                                                                      17.9                                                                                                                                    $   973,890                                                                                                        $   824,216                                                                                     18.2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
     Aerospace                                                                                              118,718                                                                                                          108,486                                                                                       9.4                                                                                                                                        462,617                                                                                                            406,541                                                                                     13.8
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
     Intersegment sales                                                                       (4 )                                                                                          (1 )                                                                                                                                                                                                                  (8 )                                                                                            (3 )
                                                                                       -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                                                                                                                                      -------------------- --------- --------------------                                                                -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Total net sales                                                                                           $ 373,048                                                                                     $ 324,167                                                                   15.1                                                                                                                                    $ 1,436,499                                                                                     $ 1,230,754                                                                  16.7
                                                                                       -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                                                                                                                                      -------------------- --------- --------------------                                                                -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Operating profit
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
     Industrial                                                                                           $  26,899                                                                                                        $  30,232                                                                                     (11.0 )                                                                                                                                  $   127,056                                                                                                        $   129,677                                                                                     (2.0 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
     Aerospace                                                                            22,705                                                                     21,142                                                                    7.4                                                                                                                      83,222                                                                       62,501                                                                  33.2
                                                                                       -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                                                                                                                                      -------------------- --------- --------------------                                                                -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Total operating profit                                                                                    $  49,604                                                                                     $  51,374                                                                   (3.4 )                                                                                                                                  $   210,278                                                                                     $   192,178                                                                   9.4
                                                                                       -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                                                                                                                                      -------------------- --------- --------------------                                                                -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Operating margin                                                                                                                                                                                                                                                                                                                                 Change                                                                                                                                                                                                                                                                                                                                                              Change
                                                                                                                                                                                                                                                                                                                         -------------------------------------------------------                                                                                                                                                                                                                                                                                                     ----------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
     Industrial                                                                                                10.6 %                                                                                                           14.0 %                                                                                    (340 )                                           bps.                                                                                          13.0 %                                                                                                             15.7 %                                                                                   (270 )                                                   bps.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
     Aerospace                                                                              19.1 %                                                                                        19.5 %                                                                                     (40 )                                           bps.                                                                       18.0 %                                                                                          15.4 %                                                                                    260                                                     bps.
                                                                                       -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                                                                                                                                      -------------------- --------- --------------------                                                                -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Total operating margin                                                                                         13.3 %                                                                                                           15.8 %                                                                                    (250 )                                           bps.                                                                                          14.6 %                                                                                                             15.6 %                                                                                   (100 )                                                   bps.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                                                                          
                                                                                                            BARNES GROUP INC.
                                                                                                       CONSOLIDATED BALANCE SHEETS
                                                                                                         (Dollars in thousands)
                                                                                                               (Unaudited)
                                                                                                                                               
                                                                                                                    December 31,                                                                                   December 31,
                                                                                                                        2017                                                                                           2016
                                                                                                           -----------------------------                                                                 ------------------------------
Assets
Current assets
  Cash and cash equivalents                                                                                                   $   145,290                                                                                   $     66,447
  Accounts receivable                                                                                                             348,943                                                                                        287,123
  Inventories                                                                                                                     241,962                                                                                        227,759
  Prepaid expenses and other current assets                                                                     32,526                                                                      27,163
                                                                                                           -------------------- ---------                                                                -------------------- ----------
                                                                                                                                                                                                          
     Total current assets                                                                                                         768,721                                                                                        608,492
                                                                                                                                                                                                          
                                                                                                                                                                                                          
Deferred income taxes                                                                                                              12,161                                                                                         25,433
Property, plant and equipment, net                                                                                                359,298                                                                                        334,489
Goodwill                                                                                                                          690,223                                                                                        633,436
Other intangible assets, net                                                                                                      507,042                                                                                        522,258
Other assets                                                                                                    28,271                                                                      13,431
                                                                                                           -------------------- ---------                                                                -------------------- ----------
                                                                                                                                                                                                          
Total assets                                                                                                                  $ 2,365,716                                                                                   $  2,137,539
                                                                                                           -------------------- ---------                                                                -------------------- ----------
                                                                                                                                                                                                          
Liabilities and Stockholders’ Equity
Current liabilities
  Notes and overdrafts payable                                                                                                $     5,669                                                                                   $     30,825
  Accounts payable                                                                                                                127,521                                                                                        112,024
  Accrued liabilities                                                                                                             181,241                                                                                        156,967
  Long-term debt - current                                                                                       1,330                                                                       2,067
                                                                                                           -------------------- ---------                                                                -------------------- ----------
                                                                                                                                                                                                          
     Total current liabilities                                                                                                    315,761                                                                                        301,883
                                                                                                                                                                                                          
Long-term debt                                                                                                                    525,597                                                                                        468,062
Accrued retirement benefits                                                                                                        89,000                                                                                        109,350
Deferred income taxes                                                                                                              73,505                                                                                         66,446
Long-term tax liability                                                                                                            79,770                                                                                              -
Other liabilities                                                                                                                  21,762                                                                                         23,440
                                                                                                                                                                                                          
Total stockholders’ equity                                                                                   1,260,321                                                                   1,168,358
                                                                                                           -------------------- ---------                                                                -------------------- ----------
                                                                                                                                                                                                          
Total liabilities and stockholders’ equity                                                                                    $ 2,365,716                                                                                   $  2,137,539
                                                                                                           -------------------- ---------                                                                -------------------- ----------
                                                                                                                                                                                                          
                                                                      
                                                                                                                                          BARNES GROUP INC.
                                                                                                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                       (Dollars in thousands)
                                                                                                                                             (Unaudited)
                                                                                                                                                                                       
                                                                                                                                                                                                         Twelve months ended
                                                                                                                                                                                                            December 31,
                                                                                                                                -----------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                       2017                                                                                                             2016
                                                                                                                                --------------------------------------------------                                                               ---------------------------------------------------
Operating activities:
Net income                                                                                                                                         $  59,415                                                                                                        $  135,601
Adjustments to reconcile net income to net cash provided by
operating activities:
  Depreciation and amortization                                                                                                                       90,150                                                                                                            80,154
  Gain on disposition of property, plant and equipment                                                                                                  (246 )                                                                                                            (349 )
  Stock compensation expense                                                                                                                          12,279                                                                                                            11,493
  Effect of U.S. tax reform on deferred tax assets                                                                                                     4,152                                                                                                                 -
  Changes in assets and liabilities, net of the effects of
  acquisitions:
    Accounts receivable                                                                                                                              (50,082 )                                                                                                         (23,057 )
    Inventories                                                                                                                                         (173 )                                                                                                           1,989
    Prepaid expenses and other current assets                                                                                                         (4,241 )                                                                                                             569
    Accounts payable                                                                                                                                  12,018                                                                                                            11,778
    Accrued liabilities                                                                                                                               14,439                                                                                                            15,825
    Deferred income taxes                                                                                                                              3,589                                                                                                            (2,210 )
    Long-term retirement benefits                                                                                                                    (16,349 )                                                                                                         (15,492 )
    Long-term tax liability                                                                                                                           79,770                                                                                                                 -
  Other                                                                                                                              (801 )                                                                                        1,345  
                                                                                                                                -------------------- ------- --------------------                                                                -------------------- -------- --------------------
                                                                                                                                                                                                                                                  
Net cash provided by operating activities                                                                                                            203,920                                                                                                           217,646
                                                                                                                                                                                                                                                  
Investing activities:
Proceeds from disposition of property, plant and equipment                                                                                             2,594                                                                                                               780
Capital expenditures                                                                                                                                 (58,712 )                                                                                                         (47,577 )
Business acquisitions, net of cash acquired                                                                                                           (8,922 )                                                                                                        (128,613 )
Component Repair Program payments                                                                                                                          -                                                                                                            (4,100 )
Other                                                                                                                              (3,000 )                                                                                            -  
                                                                                                                                -------------------- ------- --------------------                                                                -------------------- -------- --------------------
                                                                                                                                                                                                                                                  
Net cash used by investing activities                                                                                                                (68,040 )                                                                                                        (179,510 )
                                                                                                                                                                                                                                                  
Financing activities:
Net change in other borrowings                                                                                                                       (25,304 )                                                                                                           8,375
Payments on long-term debt                                                                                                                           (73,161 )                                                                                                        (321,506 )
Proceeds from the issuance of long-term debt                                                                                                         129,118                                                                                                           303,277
Proceeds from the issuance of common stock                                                                                                             2,408                                                                                                             4,611
Common stock repurchases                                                                                                                             (40,791 )                                                                                                         (20,520 )
Dividends paid                                                                                                                                       (29,551 )                                                                                                         (27,435 )
Withholding taxes paid on stock issuances                                                                                                             (5,380 )                                                                                                          (4,885 )
Other                                                                                                                             (21,090 )                                                                                        4,771  
                                                                                                                                -------------------- ------- --------------------                                                                -------------------- -------- --------------------
                                                                                                                                                                                                                                                  
Net cash used by financing activities                                                                                                                (63,751 )                                                                                                         (53,312 )
                                                                                                                                                                                                                                                  
Effect of exchange rate changes on cash flows                                                                                       6,714                                                                      (2,303 )
                                                                                                                                -------------------- ------- --------------------                                                                -------------------- -------- --------------------
                                                                                                                                                                                                                                                  
Increase (decrease) in cash and cash equivalents                                                                                                      78,843                                                                                                           (17,479 )
                                                                                                                                                                                                                                                  
Cash and cash equivalents at beginning of year                                                                                     66,447                                                                      83,926  
                                                                                                                                -------------------- ------- --------------------                                                                -------------------- -------- --------------------
                                                                                                                                                                                                                                                  
Cash and cash equivalents at end of year                                                                                                           $ 145,290                                                                                     $   66,447  
                                                                                                                                -------------------- ------- --------------------                                                                -------------------- -------- --------------------
                                                                                                                                                                                                                                                                                
 
                                                                                                                                           BARNES GROUP INC.
                                                                                                                    RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO
                                                                                                                                            FREE CASH FLOW
                                                                                                                                        (Dollars in thousands)
                                                                                                                                              (Unaudited)
                                                                                                                                 
                                                                                                                                                                                                           Twelve months ended
                                                                                                                                                                                                              December 31,
                                                                                                                                                          2017                                                                                                             2016
                                                                                                                                   --------------------------------------------------                                                               --------------------------------------------------
Free cash flow:
                                                                                                                                                                                                                                                     
Net cash provided by operating activities                                                                                                             $ 203,920                                                                                                        $ 217,646
Capital expenditures                                                                                                                 (58,712 )                                                                                     (47,577 )
                                                                                                                                   -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                     
Free cash flow(1)                                                                                                                                     $ 145,208                                                                                     $ 170,069  
                                                                                                                                   -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                     
Free cash flow to net income cash conversion ratio (as adjusted):
                                                                                                                                                                                                                                                     
Net income                                                                                                                                               59,415                                                                                                          135,601
Effects of U.S. tax reform                                                                                                            96,700                                                                          -  
                                                                                                                                   -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Net income (as adjusted)(2)                                                                                                                           $ 156,115                                                                                     $ 135,601  
                                                                                                                                   -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                     
Free cash flow to net income cash conversion ratio (as adjusted)(2)                                                                                          93 %                                                                                                            125 %

Notes: (1) The Company defines free cash flow as net cash provided by operating activities less capital expenditures. The Company believes that the free cash flow metric is useful to investors and management as a measure of cash generated by business operations that can be used to invest in future growth, pay dividends, repurchase stock and reduce debt. This metric can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity.

(2) For the purpose of calculating the cash conversion ratio, the Company has excluded the effects of U.S. tax reform, commonly referred to as the Tax Cuts and Jobs Act, from 2017 net income.

                                                                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                     BARNES GROUP INC.
                                                                                                                                                                                                                                     NON-GAAP FINANCIAL MEASURE RECONCILIATION
                                                                                                                                                                                                                                     (Dollars in thousands, except per share data)
                                                                                                                                                                                                                                     (Unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                         Three months ended December 31,                                                                                                                                                                                                                                                                                                                                                                       Twelve months ended December 31,
                                                                                                                                ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                      2017                                                                                                            2016                                                                                                                                          % Change                                                                                                                                          2017                                                                                                             2016                                                                                                                                 % Change
                                                                                                                                -------------------------------------------------                                                               -------------------------------------------------                                                               ----------------------------------------------------------------------------------------------------------------                                                               --------------------------------------------------                                                               --------------------------------------------------                                                               -----------------------------------------------------------------------------------------------
SEGMENT RESULTS
----------------------------------------------------------------
Operating Profit - Industrial Segment (GAAP)                                                                                                       $ 26,899                                                                                                        $ 30,232                                                                                                           (11.0 )                                                                                                                                                                     $ 127,056                                                                                                        $ 129,677                                                                                           (2.0 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Acquisition transaction costs                                                                                                                             -                                                                                                             (14 )                                                                                                                                                                                                                                                                                             -                                                                                                            1,164
FOBOHA short-term purchase accounting adjustments                                                                                                         -                                                                                                           1,786                                                                                                                                                                                                                                                                                           2,294                                                                                                            2,316
Restructuring actions                                                                                                              1,406                                                                         -                                                                                                                                                                                                                                                        13                                                                          -  
                                                                                                                                -------------------- ------ --------------------                                                                -------------------- ------ --------------------                                                                                                                                                                                                                                               -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating Profit - Industrial Segment as adjusted (Non-GAAP) (1)                                                                                   $ 28,305                                                                                     $ 32,004                                                                                        (11.6 )                                                                                                                                                                     $ 129,363                                                                                     $ 133,157                                                                        (2.8 )
                                                                                                                                -------------------- ------ --------------------                                                                -------------------- ------ --------------------                                                                                                                                                                                                                                               -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating Margin - Industrial Segment (GAAP)                                                                                                           10.6 %                                                                                                          14.0 %                                                                                                          (340 )                                                                      bps.                                                                                                13.0 %                                                                                                           15.7 %                                                                                         (270 )                                                                      bps.
Operating Margin - Industrial Segment as adjusted (Non-GAAP) (1)                                                                                       11.1 %                                                                                                          14.8 %                                                                                                          (370 )                                                                      bps.                                                                                                13.3 %                                                                                                           16.2 %                                                                                         (290 )                                                                      bps.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating Profit - Aerospace Segment (GAAP)                                                                                                        $ 22,705                                                                                                        $ 21,142                                                                                                             7.4                                                                                                                                                                       $  83,222                                                                                                        $  62,501                                                                                           33.2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Contract termination dispute charges                                                                                                                      -                                                                                                               7                                                                                                                                                                                                                                                                                               -                                                                                                            3,005
Contract termination arbitration award                                                                                                 -                                                                    (1,371 )                                                                                                                                                                                                                                                                          -                                                                     (1,371 )
                                                                                                                                -------------------- ------ --------------------                                                                -------------------- ------ --------------------                                                                                                                                                                                                                                               -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating Profit - Aerospace Segment as adjusted (Non-GAAP) (1)                                                                                    $ 22,705                                                                                     $ 19,778                                                                                         14.8                                                                                                                                                                       $  83,222                                                                                     $  64,135                                                                        29.8
                                                                                                                                -------------------- ------ --------------------                                                                -------------------- ------ --------------------                                                                                                                                                                                                                                               -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating Margin - Aerospace Segment (GAAP)                                                                                                            19.1 %                                                                                                          19.5 %                                                                                                           (40 )                                                                      bps.                                                                                                18.0 %                                                                                                           15.4 %                                                                                          260                                                                        bps.
Operating Margin - Aerospace Segment as adjusted (Non-GAAP) (1)            19.1 %                              18.2 %                                90               bps.                    18.0 %                               15.8 %                                 220               bps.
---------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
CONSOLIDATED RESULTS
----------------------------------------------------------------
Operating Income (GAAP)                                                                                                                            $ 49,604                                                                                                        $ 51,374                                                                                                            (3.4 )                                                                                                                                                                     $ 210,278                                                                                                        $ 192,178                                                                                            9.4
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Acquisition transaction costs                                                                                                                             -                                                                                                             (14 )                                                                                                                                                                                                                                                                                             -                                                                                                            1,164
FOBOHA short-term purchase accounting adjustments                                                                                                         -                                                                                                           1,786                                                                                                                                                                                                                                                                                           2,294                                                                                                            2,316
Restructuring actions                                                                                                                                 1,406                                                                                                               -                                                                                                                                                                                                                                                                                              13                                                                                                                -
Contract termination dispute charges                                                                                                                      -                                                                                                               7                                                                                                                                                                                                                                                                                               -                                                                                                            3,005
Contract termination arbitration award                                                                                                 -                                                                    (1,371 )                                                                                                                                                                                                                                                                          -                                                                     (1,371 )
                                                                                                                                -------------------- ------ --------------------                                                                -------------------- ------ --------------------                                                                                                                                                                                                                                               -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating Income as adjusted (Non-GAAP) (1)                                                                                                        $ 51,010                                                                                     $ 51,782                                                                                         (1.5 )                                                                                                                                                                     $ 212,585                                                                                     $ 197,292                                                                         7.8
                                                                                                                                -------------------- ------ --------------------                                                                -------------------- ------ --------------------                                                                                                                                                                                                                                               -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating Margin (GAAP)                                                                                                                                13.3 %                                                                                                          15.8 %                                                                                                          (250 )                                                                      bps.                                                                                                14.6 %                                                                                                           15.6 %                                                                                         (100 )                                                                      bps.
Operating Margin as adjusted (Non-GAAP) (1)                                13.7 %                              16.0 %                              (230 )                                bps.                    14.8 %                               16.0 %                                (120 )                                bps.
---------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Diluted Net (Loss) Income per Share (GAAP)                                                                                                         $  (1.10 )                                                                                                      $   0.67                                                                                                              NM                                                                                                                                                                       $    1.09                                                                                                        $    2.48                                                                                          (56.0 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Acquisition transaction costs                                                                                                                             -                                                                                                               -                                                                                                                                                                                                                                                                                               -                                                                                                             0.02
FOBOHA short-term purchase accounting adjustments                                                                                                         -                                                                                                            0.03                                                                                                                                                                                                                                                                                            0.03                                                                                                             0.03
Restructuring actions                                                                                                                                  0.02                                                                                                               -                                                                                                                                                                                                                                                                                           (0.01 )                                                                                                              -
Contract termination dispute charges                                                                                                                      -                                                                                                               -                                                                                                                                                                                                                                                                                               -                                                                                                             0.03
Contract termination arbitration award                                                                                                                    -                                                                                                           (0.03 )                                                                                                                                                                                                                                                                                             -                                                                                                            (0.03 )
Effects of U.S. tax reform                                                                                                          1.79                                                                         -                                                                                                                                                                                                                                                      1.77                                                                          -  
                                                                                                                                -------------------- ------ --------------------                                                                -------------------- ------ --------------------                                                                                                                                                                                                                                               -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Diluted Net Income per Share as adjusted (Non-GAAP) (1)                                                                                            $   0.71                                                                                     $   0.67                                                                                          6.0                                                                                                                                                                       $    2.88                                                                                     $    2.53                                                                        13.8
                                                                                                                                -------------------- ------ --------------------                                                                -------------------- ------ --------------------                                                                                                                                                                                                                                               -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                  
---------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Full-Year 2018 Outlook
                                                                                                                                                                                                                                                                                                                                                                ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Diluted Net Income per Share (GAAP)                                                                                                                                                                                                                                                                                                                                                $   2.98                                                                         to                                                                                            $    3.13
                                                                                                                                                                                                                                                                  
---------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
NM - Not Meaningful

Notes: (1) The Company has excluded the following from its "as adjusted" financial measurements for 2017: 1) short-term purchase accounting adjustments related to its FOBOHA acquisition, 2) the net loss (gain) from restructuring actions related to the closure and consolidation of two manufacturing facilities within the Industrial segment and 3) the effects of U.S. tax reform commonly referred to as the Tax Cuts and Jobs Act ($96,700). The Company has excluded the following from its "as adjusted" financial measurements for 2016: 1) transaction costs related to its FOBOHA acquisition, 2) short-term purchase accounting adjustments related to its FOBOHA acquisition, 3) charges related to the contract termination dispute and 4) operating income related to the contract termination arbitration award and the non-operating interest income awarded. The tax effects of these items, excluding the effects of U.S. tax reform which impacted tax expense directly, were calculated based on the respective tax jurisdiction of each item and range from approximately 19% to 37%. Management believes that these adjustments provide the Company and its investors with an indication of our baseline performance excluding items that are not considered to be reflective of our ongoing results. Management does not intend results excluding the adjustments to represent results as defined by GAAP, and the reader should not consider it as an alternative measurement calculated in accordance with GAAP, or as an indicator of the Company’s performance. Accordingly, the measurements have limitations depending on their use.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180216005058r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180216005058/en/

SOURCE: Barnes Group Inc.

Barnes Group Inc. 
William Pitts 
Director, Investor Relations 
860-583-7070


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