RBC Bearings Incorporated (Nasdaq: ROLL), a leading
international manufacturer of highly-engineered precision bearings
and components for the industrial, defense and aerospace
industries, today reported results for the third quarter of fiscal
year 2018.
Third Quarter Highlights
($ in millions)
Fiscal 2018 Fiscal
2017 Change GAAP Adjusted (1) GAAP
Adjusted (1) GAAP Adjusted (1) Net sales $166.9
$166.9 $146.7 $146.7 13.8% 13.8% Gross margin $64.7
$64.7 $52.4 $55.6 23.4% 16.3% Gross margin % 38.8% 38.8% 35.7%
37.9% Operating income $33.1 $34.2 $20.5 $27.6 61.3% 24.0%
Operating income % 19.9% 20.5% 14.0% 18.8% Net income $23.8 $25.7
$12.8 $17.4 86.6% 48.1% Diluted EPS $0.97 $1.05 $0.54 $0.73 79.6%
43.8% (1) Results exclude items in reconciliation below.
Nine Month Highlights
($ in millions)
Fiscal 2018 Fiscal
2017 Change GAAP Adjusted (1) GAAP
Adjusted (1) GAAP Adjusted (1) Net sales $495.1
$495.1 $455.2 $455.2 8.8% 8.8% Gross margin $188.4
$188.4 $166.4 $170.0 13.2% 10.8% Gross margin % 38.1% 38.1% 36.5%
37.3% Operating income $90.2 $97.8 $79.3 $87.0 13.7% 12.4%
Operating income % 18.2% 19.8% 17.4% 19.1% Net income $60.5 $67.9
$49.0 $53.8 23.3% 26.2% Diluted EPS $2.49 $2.79 $2.07 $2.27 20.3%
22.9% (1) Results exclude items in reconciliation below.
“Our third quarter results demonstrated strong year-over-year
and sequential improvements in each of our key performance metrics,
during what is traditionally our slowest seasonal fiscal quarter,”
said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer.
“Continued sales growth in our aerospace and industrial markets,
combined with the execution of our cost initiatives, have driven
strong quarterly and year-to-date results, positioning the Company
well as we enter the fourth quarter.”
Third Quarter Results
Net sales for the third quarter of fiscal 2018 were $166.9
million, an increase of 13.8% from $146.7 million in the third
quarter of fiscal 2017. Net sales for the aerospace markets
increased 8.9% and the industrial markets increased by 23.1%. Gross
margin for the third quarter of fiscal 2018 was $64.7 million
compared to $52.4 million for the same period last year. Gross
margin as a percentage of net sales was 38.8% in the third quarter
of fiscal 2018 compared to 35.7% for the same period last year.
SG&A for the third quarter of fiscal 2018 was $28.2 million,
an increase of $2.5 million from $25.7 million for the same period
last year. As a percentage of net sales, SG&A was 16.9% for the
third quarter of fiscal 2018 compared to 17.5% for the same period
last year. The increase was primarily due to higher personnel
related expenses of $1.7 million, $0.3 million of additional
incentive stock compensation and other items of $0.5 million.
Other operating expenses for the third quarter of fiscal 2018
totaled $3.4 million compared to $6.1 million for the same period
last year. For the third quarter of fiscal 2018, other operating
expenses were comprised of $1.1 million related to restructuring of
our Canadian operation and $2.3 million of amortization of
intangible assets. Other operating expenses last year consisted of
$3.8 million in restructuring and integration costs associated with
our industrial manufacturing operation in South Carolina and $2.3
million in amortization of intangible assets.
Operating income for the third quarter of fiscal 2018 was $33.1
million compared to operating income of $20.5 million for the same
period last year. Excluding costs associated with restructuring of
our Canadian operation, operating income would have been $34.2
million for the third quarter of fiscal 2018 compared to an
adjusted $27.6 million for the same period last year. Excluding
these adjustments, operating income as a percentage of net sales
would have been 20.5% compared to 18.8% for the same period last
year.
Interest expense, net was $1.8 million for the third quarter of
fiscal 2018 compared to $2.1 million for the same period last
year.
Income tax expense for the third quarter of fiscal 2018 was $7.5
million compared to $5.9 million for the same period last year. Our
effective income tax rate for the third quarter of fiscal 2018 was
23.9% compared to 31.5% for the same period last year. Tax
provision was impacted by the adoption of the Tax Cuts and Jobs Act
(TCJA) signed into law by the President on December 22, 2017. The
income tax expense includes approximately $9.5 million expense
related to the one-time repatriation transition tax offset by
approximately $8.7 million benefit associated with the revaluation
of deferred tax liabilities. The income tax expense also includes
approximately $1.2 million of benefit associated with the adoption
of ASU No. 2016-09 “Improvements to Employee Share-Based Payment
Accounting” and reflects the lower blended statutory rate as a
result of the enactment of TCJA.
Net income for the third quarter of fiscal 2018 was $23.8
million compared to $12.8 million for the same period last year. On
an adjusted basis, net income would have been $25.7 million for the
third quarter of fiscal 2018, compared to an adjusted net income of
$17.4 million for the same period last year.
Diluted EPS for the third quarter of fiscal 2018 was 97 cents
per share compared to 54 cents per share for the same period last
year. On an adjusted basis, diluted EPS for the third quarter of
fiscal 2018 would have been $1.05 per share compared to an adjusted
diluted EPS of 73 cents per share for the same period last year, an
increase of 43.8%.
Backlog, as of December 30, 2017, was $392.5 million compared to
$349.1 million as of December 31, 2016.
Tax Reform
The third quarter of fiscal 2018 includes the impact of
adjustments made in relation to the recently enacted Tax Cuts and
Jobs Act (TCJA). These one-time adjustments resulted in a net tax
charge of $0.8 million. These one-time adjustments were mainly
comprised of a charge of $9.5 million for the estimated
repatriation transition tax offset by an estimated benefit of $8.7
million associated with revaluation of our deferred tax
liabilities. The third quarter tax provision also benefited from a
lower blended statutory tax rate of 31.5% due to the enactment of
TCJA. Based on our initial reviews and subject to further
regulatory guidance issued in connection with TCJA, we estimate the
fourth quarter of fiscal 2018 effective tax rate will be
approximately 25.0% to 27.0% and we estimate the full year fiscal
2019 effective tax rate will be approximately 20.0% to 22.0%.
Restructuring of Canadian
Operation
The Company recorded an after-tax charge of $1.1 million in the
third quarter of fiscal 2018 associated with the second quarter
fiscal 2018 decision to restructure its manufacturing operation in
Montreal, Canada. The $1.1 million charge was primarily associated
with employee severance and termination costs. Year to date
after-tax charges are $6.7 million and the total expected impact of
the restructuring remains between $7.0 million and $7.5 million in
after-tax charges.
Outlook for the Fourth Quarter Fiscal
2018
The Company expects net sales to be approximately $172.0 million
to $175.0 million in the fourth quarter fiscal 2018. This would
result in a growth rate of approximately 7.4% to 9.2% on a year
over year basis.
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
844-419-1755 (international callers dial 216-562-0468) and provide
conference ID # 3083519. An audio replay of the call will be
available from 2:00 p.m. ET February 6th, 2018 until 2:00 p.m. ET
February 13th, 2018. The replay can be accessed by dialing
855-859-2056 (international callers dial 404-537-3406) and
providing conference call ID # 3083519. 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 U.S. 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
U.S. GAAP. A reconciliation of the non-GAAP measures disclosed in
the press release with the most comparable U.S. 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 and components
requiring sophisticated design, testing and manufacturing
capabilities for the diversified industrial, aerospace and defense
markets. The Company is headquartered in Oxford, Connecticut.
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, tax legislation and
changes, including the impact of the TCJA, the Company’s ability to
meet its debt obligations, the Company’s ability to acquire and
integrate complementary businesses, 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 30,
December 31, December 30, December 31,
2017 2016 2017 2016 Net sales $
166,858 $ 146,656 $ 495,072 $ 455,178 Cost of sales 102,193
94,271 306,687 288,811
Gross margin 64,665 52,385 188,385 166,367 Operating
expenses: Selling, general and administrative 28,162 25,712 83,535
76,696 Other, net 3,380 6,144
14,649 10,367 Total operating expenses 31,542
31,856 98,184 87,063 Operating income 33,123 20,529 90,201
79,304 Interest expense, net 1,761 2,111 5,704 6,659 Other
non-operating (income) expense 26 (216 )
462 51 Income before income taxes
31,336 18,634 84,035 72,594 Provision for income taxes 7,504
5,864 23,571 23,556
Net income $ 23,832 $ 12,770 $ 60,464 $
49,038 Net income per common share: Basic $ 0.99 $
0.54 $ 2.53 $ 2.09 Diluted $ 0.97 $ 0.54 $ 2.49 $ 2.07
Weighted average common shares: Basic 23,985,925 23,581,921
23,912,474 23,457,717 Diluted 24,446,115 23,813,780 24,322,165
23,719,121
Three Months
Ended Nine Months Ended Reconciliation of Reported
Gross Margin to December 30, December 31,
December 30, December 31, Adjusted Gross
Margin: 2017 2016 2017 2016
Reported gross margin $ 64,665 $ 52,385 $ 188,385 $ 166,367
Inventory purchase accounting adjustment - - - 382 Integration and
restructuring 3,215 3,215
Adjusted gross margin $ 64,665 $ 55,600 $ 188,385
$ 169,964
Three
Months Ended Nine Months Ended Reconciliation of
Reported Operating Income to December 30, December
31, December 30, December 31, Adjusted
Operating Income: 2017 2016 2017
2016 Reported operating income $ 33,123 $ 20,529 $
90,201 $ 79,304 Inventory purchase accounting adjustment - - - 382
Integration and restructuring 1,091 7,060
7,585 7,282 Adjusted operating
income $ 34,214 $ 27,589 $ 97,786 $ 86,968
Reconciliation of Reported Net Income
and Net Income
Three Months Ended Nine Months Ended Per Common
Share to Adjusted Net Income and December 30,
December 31, December 30, December 31,
Adjusted Net Income Per Common Share: 2017
2016 2017 2016 Reported net income $
23,832 $ 12,770 $ 60,464 $ 49,038 Inventory purchase accounting
adjustment (1) - - - 257 Restructuring (1) 1,091 4,838 6,668 4,987
Foreign exchange translation loss (gain) (1) (47 ) (199 ) 150 (199
) TCJA repatriation transition tax 9,491 - 9,491 - TCJA revaluation
of deferred tax liabilities (8,708 ) - (8,708 ) - Discrete tax
reserve loss (benefit) 45 (56 ) (137 )
(238 ) Adjusted net income $ 25,704 $ 17,353 $
67,928 $ 53,845 (1) After tax impact. Adjusted
net income per common share: Basic $ 1.07 $ 0.74 $ 2.84 $ 2.30
Diluted $ 1.05 $ 0.73 $ 2.79 $ 2.27 Weighted average common
shares: Basic 23,985,925 23,581,921 23,912,474 23,457,717 Diluted
24,446,115 23,813,780 24,322,165 23,719,121
Three Months Ended Nine Months Ended December
30, December 31, December 30, December 31,
Segment Data, Net External Sales: 2017 2016
2017 2016 Plain bearings segment $ 69,764 $
65,822 $ 214,809 $ 205,107 Roller bearings segment 32,485 26,157
96,215 80,786 Ball bearings segment 16,496 13,700 48,756 41,979
Engineered products segment 48,113 40,977
135,292 127,306 $ 166,858
$ 146,656 $ 495,072 $ 455,178
Three Months Ended Nine Months Ended
December 30, December 31, December 30,
December 31, Selected Financial Data: 2017
2016 2017 2016 Depreciation and
amortization $ 6,958 $ 6,779 $ 21,196 $ 20,478 Incentive
stock compensation expense $ 3,267 $ 2,962 $ 9,897 $ 8,914
Adjusted operating income plus
depreciation/amortization
plus incentive stock compensation
expense
$ 44,439 $ 37,330 $ 128,879 $ 116,360 Cash provided
by operating activities $ 28,534 $ 36,062 $ 92,496 $ 74,575
Capital expenditures $ 7,875 $ 4,794 $ 20,542 $ 14,415 Total
debt $ 197,953 $ 294,943 Cash and short-term investments $
43,822 $ 39,472 Repurchase of common stock $ 4,933 $ 4,750
Backlog $ 392,462 $ 349,123
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180206005340/en/
RBC BearingsDaniel A. Bergeron,
203-267-5028dbergeron@rbcbearings.comorAlpha IR GroupMichael
Cummings, 617-461-1101investors@rbcbearings.com
RBC Bearings (NASDAQ:ROLL)
Historical Stock Chart
From Mar 2024 to Apr 2024
RBC Bearings (NASDAQ:ROLL)
Historical Stock Chart
From Apr 2023 to Apr 2024