RBC Bearings Incorporated (Nasdaq:ROLL), a leading international
manufacturer of highly-engineered precision plain, roller and ball
bearings for the industrial, defense and aerospace industries,
today reported results for the third quarter of fiscal year
2015.
- Increased net sales by 5.7%
year-over-year
- Increased gross margin by 8.2%
year-over-year
- Increased adjusted net income by
13.0% compared to same period last year
Third Quarter
Highlights
($ in millions)
Fiscal 2015
Fiscal 2014 Change GAAP
Adjusted (1) GAAP Adjusted (1) GAAP
Adjusted (1) Net sales $106.3 $106.3
$100.5 $100.5 5.7% 5.7% Gross margin
$41.7 $41.7 $38.5 $38.5 8.2% 8.2% Gross margin % 39.2% 39.2% 38.3%
38.3% Operating income $20.6 $22.2 $19.7 $19.7 4.7% 13.0% Operating
income % 19.4% 20.9% 19.6% 19.6% Net income $14.1 $14.4 $12.8 $12.8
10.1% 13.0% Diluted EPS $0.60 $0.62 $0.55 $0.55 9.1% 12.7%
(1) Results exclude items in
reconciliation below.
Nine Month
Highlights
($ in millions)
Fiscal 2015
Fiscal 2014 Change GAAP
Adjusted (1) GAAP Adjusted (1) GAAP
Adjusted (1) Net sales $331.9 $331.9
$305.2 $305.2 8.7% 8.7% Gross margin
$125.2 $128.9 $119.6 $119.6 4.7% 7.8% Gross margin % 37.7% 38.9%
39.2% 39.2% Operating income $63.1 $71.1 $63.5 $65.4 -0.6% 8.7%
Operating income % 19.0% 21.4% 20.8% 21.4% Net income $43.3 $46.9
$42.0 $42.7 3.1% 9.8% Diluted EPS $1.85 $2.01 $1.81 $1.84 2.2% 9.2%
(1) Results exclude items in
reconciliation below.
“Our third quarter results showed solid year-over-year
improvements in net sales, gross margin and earnings, while
reflecting the typical third quarter seasonality from fewer
production days,” said Dr. Michael J. Hartnett, Chairman and Chief
Executive Officer. “Our industrial businesses performed well in the
quarter and we improved our execution which is reflected in a
stronger gross margin performance.”
Third Quarter Results
Net sales for the third quarter of fiscal 2015 were $106.3
million, an increase of 5.7% from $100.5 million in the third
quarter of fiscal 2014. The increase in net sales was mainly the
result of a 13.9% increase in industrial sales driven by
construction, oil and gas, and the general industrial markets.
Aerospace and defense decreased 0.3% mainly due to a decrease in
defense and distribution. Gross margin for the third quarter was
$41.7 million compared to $38.5 million for the same period last
year. Gross margin as a percentage of net sales was 39.2% in the
third quarter of fiscal 2015 compared to 38.3% for the same period
last year.
SG&A for the third quarter of fiscal 2015 was $19.3 million,
an increase of $1.0 million from $18.3 million for the same period
last year. The increase of $1.0 million was primarily attributable
to an increase of $0.6 million in incentive stock compensation
expenses and $0.4 million in other items. As a percentage of net
sales, SG&A was 18.1% for the third quarter of fiscal 2015
compared to 18.2% for the same period last year.
Other operating expenses for the third quarter of fiscal 2015
totaled $1.8 million, an increase of $1.2 million, compared to $0.6
million for the same period last year. For the third quarter of
fiscal 2015 other operating expenses consisted of $0.4 million of
amortization of intangibles, $0.1 million in costs associated with
consolidation and restructuring, $1.5 million associated with
acquisition activity and $0.2 million of other income. For the same
period last year, other operating expenses consisted of $0.5
million of amortization of intangibles and $0.1 million of other
items.
Operating income for the third quarter of fiscal 2015 was $20.6
million compared to operating income of $19.7 million for the same
period last year. Excluding costs associated with the consolidation
and restructuring and acquisition activity, operating income would
have been $22.2 million for the third quarter of fiscal 2015
compared to $19.7 million for the same period last year. Excluding
these adjustments, operating income as a percentage of net sales
would have been 20.9% compared to 19.6% for the same period last
year.
Interest expense, net was $0.3 million for both the third
quarter of fiscal 2015 and the same period last year.
Income tax expense for the third quarter of fiscal 2015 was $6.1
million compared to $6.6 million for the same period last year. Our
effective income tax rate for the third quarter of fiscal 2015 was
30.3% compared to 34.0% for the same period last year. The
effective income tax rate for the third quarter of fiscal 2015
includes discrete tax benefits of $0.7 million. The effective
income tax rate without the discrete tax benefits would have been
33.7% compared to 34.0% for the same period last year.
Net income for the third quarter of fiscal 2015 was $14.1
million compared to $12.8 million for the same period last year.
Excluding the after tax impact of costs associated with
consolidation and restructuring, acquisition activity costs, and
the discrete tax benefits, net income would have been $14.4 million
for the third quarter of fiscal 2015, compared to net income of
$12.8 million for the same period last year.
Diluted EPS for the third quarter of fiscal 2015 was 60 cents
per share compared to 55 cents per share for the same period last
year. Excluding the after tax impact of costs associated with
consolidation and restructuring, acquisition activity costs, and
the discrete tax benefits, diluted EPS for the third quarter of
fiscal 2015 would have been 62 cents per share compared to diluted
EPS of 55 cents per share for the same period last year, an
increase of 12.7%.
Backlog, as of December 27, 2014, was $217.5 million compared to
$218.6 million as of December 28, 2013.
Acquisition Activity
Costs
In the third quarter of fiscal 2015, the Company incurred $1.5
million in legal, accounting, tax, and environmental due diligence
expenses on investigating a large transformational acquisition
target. The Company was not successful in winning the final bid in
the auction process.
Live Webcast
RBC Bearings Incorporated will host a webcast at 11:00 a.m. ET
today to discuss the quarterly results. To access the webcast, go
to the investor relations portion of the Company’s website,
www.rbcbearings.com, and click on the webcast icon. If you do not
have access to the Internet and wish to listen to the call, dial
877-415-3182 (international callers dial 857-244-7325) and enter
conference ID # 67106856. An audio replay of the call will be
available from 3 PM ET February 3, 2015 until 11:59 PM ET February
10, 2015. The replay can be accessed by dialing 888-286-8010
(international callers dial 617-801-6888) and entering conference
call ID # 21933962. Investors are advised to dial into the call at
least ten minutes prior to the call to register.
Non-GAAP Financial
Measures
In addition to disclosing results of operations that are
determined in accordance with generally accepted accounting
principles (“GAAP”), this press release also discloses non-GAAP
results of operations that exclude certain items. These non-GAAP
measures adjust for items that Management believes are unusual.
Management believes that the presentation of these non-GAAP
measures provides useful information to investors regarding the
Company’s results of operations, as these non-GAAP measures allow
investors to better evaluate ongoing business performance.
Investors should consider non-GAAP measures in addition to, not as
a substitute for, financial measures prepared in accordance with
GAAP. A reconciliation of the non-GAAP measures disclosed in the
press release with the most comparable GAAP measures are included
in the financial table attached to this press release.
About RBC Bearings
RBC Bearings Incorporated is an international manufacturer and
marketer of highly engineered precision bearings and components.
Founded in 1919, the Company is primarily focused on producing
highly technical or regulated bearing products requiring
sophisticated design, testing, and manufacturing capabilities for
the diversified industrial, aerospace, and defense markets.
Headquartered in Oxford, Connecticut, RBC Bearings currently
employs approximately 2,510 people and operates 25 manufacturing
facilities in four countries.
Safe Harbor for Forward Looking
Statements
Certain statements in this press release contain
“forward-looking statements.” All statements other than statements
of historical fact are “forward-looking statements” for purposes of
federal and state securities laws, including the section of this
press release entitled “Outlook”; any projections of earnings,
revenue or other financial items relating to the Company, any
statement of the plans, strategies and objectives of management for
future operations; any statements concerning proposed future growth
rates in the markets we serve; any statements of belief; any
characterization of and the Company’s ability to control contingent
liabilities; anticipated trends in the Company’s businesses; and
any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “estimate,”
“intend,” “continue,” “believe,” “expect,” “anticipate,” and other
similar words. Although the Company believes that the expectations
reflected in any forward-looking statements are reasonable, actual
results could differ materially from those projected or assumed in
any of our forward-looking statements. Our future financial
condition and results of operations, as well as any forward-looking
statements, are subject to change and to inherent risks and
uncertainties beyond the control of the Company. These risks and
uncertainties include, but are not limited to, risks and
uncertainties relating to general economic conditions, geopolitical
factors, future levels of general industrial manufacturing
activity, future financial performance, market acceptance of new or
enhanced versions of the Company’s products, the pricing of raw
materials, changes in the competitive environments in which the
Company’s businesses operate, the outcome of pending or future
litigation and governmental proceedings and approvals, estimated
legal costs, increases in interest rates, the Company’s ability to
meet its debt obligations, and risks and uncertainties listed or
disclosed in the Company’s reports filed with the Securities and
Exchange Commission, including, without limitation, the risks
identified under the heading “Risk Factors” set forth in the
Company’s most recent Annual Report filed on Form 10-K. The Company
does not intend, and undertakes no obligation, to update or alter
any forward-looking statements.
RBC Bearings Incorporated Consolidated Statements
of Operations (dollars in thousands, except share and per
share data) (Unaudited)
Three Months Ended
Nine Months Ended December 27, December 28,
December 27, December 28, 2014 2013
2014 2013 Net sales $ 106,322 $ 100,546 $
331,861 $ 305,168 Cost of sales 64,669 62,050
206,636 185,612 Gross margin 41,653
38,496 125,225 119,556 Operating expenses: Selling, general
and administrative 19,266 18,273 56,779 52,397 Other, net
1,798 566 5,349 3,688
Total operating expenses 21,064 18,839 62,128 56,085
Operating income 20,589 19,657 63,097 63,471 Interest
expense, net 288 276 820 770 Other non-operating (income) expense
146 43 (356 ) (164 ) Income
before income taxes 20,155 19,338 62,633 62,865 Provision for
income taxes 6,104 6,574 19,314
20,860 Net income $ 14,051 $ 12,764 $ 43,319
$ 42,005 Net income per common share: Basic $
0.61 $ 0.56 $ 1.88 $ 1.84 Diluted $ 0.60 $ 0.55 $ 1.85 $ 1.81
Weighted average common shares: Basic 23,090,635 22,908,556
23,057,864 22,841,011 Diluted 23,376,480 23,311,397 23,369,308
23,205,716
Three Months
Ended Nine Months Ended Reconciliation of Reported
Gross Margin to December 27, December 28,
December 27, December 28, Adjusted Gross
Margin: 2014 2013 2014 2013
Reported gross margin $ 41,653
$ 38,496 $ 125,225
$ 119,556 Consolidation and restructuring - -
3,707 - Adjusted gross margin $ 41,653
$ 38,496 $ 128,932 $ 119,556
Three Months Ended Nine Months
Ended Reconciliation of Reported Operating Income to
December 27, December 28, December 27,
December 28, Adjusted Operating Income: 2014
2013 2014 2013 Reported operating
income $ 20,589
$ 19,657 $ 63,097
$ 63,471 Consolidation and restructuring 88 - 6,470 1,498 Costs
associated with acquisitions 1,527 - 1,527 374 Fixed asset
disposals - - - 43
Adjusted operating income $ 22,204 $ 19,657 $ 71,094
$ 65,386
Reconciliation of Reported Net Income and Net Income
Three Months Ended Nine Months Ended Per Common
Share to Adjusted Net Income and December 27,
December 28, December 27, December 28,
Adjusted Net Income Per Common Share: 2014
2013 2014 2013 Reported net income $
14,051
$ 12,764 $ 43,319
$ 42,005 Consolidation and restructuring (1) 58 - 6,440 1,001 Costs
associated with acquisitions (1) 1,012 - 1,012 250 Fixed asset
disposals (1) - - - 29 Discrete tax benefit (698 ) -
(3,829 ) (549 ) Adjusted net income $ 14,423 $
12,764 $ 46,942 $ 42,736 (1) After tax impact.
Adjusted net income per common share: Basic $ 0.62 $ 0.56 $ 2.04 $
1.87 Diluted $ 0.62 $ 0.55 $ 2.01 $ 1.84 Weighted average
common shares: Basic 23,090,635 22,908,556 23,057,864 22,841,011
Diluted 23,376,480 23,311,397 23,369,308 23,205,716
Three Months Ended Nine Months
Ended December 27, December 28, December
27, December 28, Segment Data, Net External
Sales: 2014 2013 2014 2013
Plain bearings segment $ 53,770 $ 52,991 $ 171,101 $ 162,909 Roller
bearings segment 31,358 27,284 96,627 85,911 Ball bearings segment
14,038 13,054 41,676 33,709 Other segment 7,156
7,217 22,457 22,639 $ 106,322
$ 100,546 $ 331,861 $ 305,168
Three Months Ended Nine Months Ended
December 27, December 28, December 27,
December 28, Selected Financial Data: 2014
2013 2014 2013 Depreciation and
amortization $ 3,778 $ 3,718 $ 11,845 $ 11,308 Incentive
stock compensation expense $ 2,196 $ 1,561 $ 6,231 $ 4,300
Cash provided by operating activities $ 17,677 $ 14,426 $ 62,405 $
35,965 Capital expenditures $ 4,412 $ 8,030 $ 15,870 $
22,622 Total debt $ 9,121 $ 10,665 Cash and
short-term investments $ 119,240 $ 118,275 Cash dividends
paid to shareholders $ 46,014 $ - Repurchase of common stock
$ 7,049 $ 662 Backlog $ 217,525 $ 218,567
RBC BearingsDaniel A. Bergeron,
203-267-5028dbergeron@rbcbearings.comorAlpha IR GroupMichael
Cummings, 617-982-0475investors@rbcbearings.com
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