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 2019.
Highlights for the Third Quarter Fiscal
2019
- Organic Net Sales up 6.5%
Year-Over-Year
- Gross Margin percentage 39.7% up from
38.8% Last Year
- Adjusted Operating Income 21.4% up from
20.6% Last Year
- Adjusted Fully Diluted EPS $1.15 up
from $1.05 Last Year
Third Quarter
Highlights
($ in millions)
Fiscal
2019 Fiscal 2018 Change GAAP Adjusted (1)
GAAP Adjusted (1) GAAP Adjusted (1) Net sales $171.5
$171.5 $166.9 $166.9 2.8% Gross margin $68.1
$68.1 $64.8 $64.8 5.2% Gross margin % 39.7% 39.7% 38.8% 38.8%
Operating income $19.8 $36.6 $33.3 $34.4 -40.4% 6.6% Operating
income % 11.6% 21.4% 19.9% 20.6% Net income $16.2 $28.5 $23.8 $25.7
-32.1% 10.8% Diluted EPS $0.65 $1.15 $0.97 $1.05 -33.0% 9.5% (1)
Results exclude items in reconciliation below.
Nine Month
Highlights
($ in millions)
Fiscal
2019 Fiscal 2018 Change GAAP Adjusted (1)
GAAP Adjusted (1) GAAP Adjusted (1) Net sales $520.4
$520.4 $495.1 $495.1 5.1% Gross margin $203.7
$203.7 $188.7 $188.7 7.9% Gross margin % 39.1% 39.1% 38.1% 38.1%
Operating income $91.7 $108.5 $90.7 $98.3 1.1% 10.4% Operating
income % 17.6% 20.9% 18.3% 19.8% Net income $73.8 $86.8 $60.5 $67.9
22.0% 27.8% Diluted EPS $2.99 $3.52 $2.49 $2.79 20.1% 26.2% (1)
Results exclude items in reconciliation below.
“Our third quarter results reflect solid organic net sales and
gross margin improvements across the organization, setting the
stage for a strong end to fiscal 2019,” said Dr. Michael J.
Hartnett, Chairman and Chief Executive Officer.
Third Quarter ResultsNet
sales for the third quarter of fiscal 2019 were $171.5 million, an
increase of 2.8% from $166.9 million in the third quarter of fiscal
2018. Excluding the RBC Canada operation, which was restructured in
the second quarter of fiscal 2018, and the Miami division, which
was sold in November 2018, organic net sales increased 6.5%
year-over-year. Net sales for the aerospace markets increased 0.7%
in total and 6.4% on an organic basis. Industrial market sales grew
6.2% in total and 6.7% on an organic basis. Gross margin for the
third quarter of fiscal 2019 was $68.1 million compared to $64.8
million for the same period last year. Gross margin as a percentage
of net sales was 39.7% in the third quarter of fiscal 2019 compared
to 38.8% for the same period last year.
SG&A for the third quarter of fiscal 2019 was $29.1 million,
an increase of $0.9 million from $28.2 million for the same period
last year. The increase was primarily due to higher
personnel-related expenses of $0.2 million, $0.6 million of
additional share-based compensation and other items of $0.1
million. As a percentage of net sales, SG&A was 17.0% for the
third quarter of fiscal 2019 compared to 16.9% for the same period
last year.
Other operating expenses for the third quarter of fiscal 2019
totaled $19.1 million compared to $3.3 million for the same period
last year. For the third quarter of fiscal 2019, other operating
expenses consisted primarily of $16.8 million of expenses related
to the sale of the Miami division and $2.4 million in amortization
of intangible assets offset by $0.1 million of other income. For
the third quarter of fiscal 2018, other operating expenses were
comprised mainly of $1.1 million related to restructuring of the
RBC Canada operation and $2.3 million of amortization of intangible
assets, partially offset by $0.1 million of other income.
Operating income for the third quarter of fiscal 2019 was $19.8
million compared to operating income of $33.3 million for the same
period last year. Excluding costs associated with the sale of the
Miami division in the third quarter of fiscal 2019, adjusted
operating income for the third quarter of fiscal 2019 was $36.6
million. Excluding costs associated with the restructuring of our
Canada operation in fiscal 2018, adjusted operating income for the
third quarter of fiscal 2018 was $34.4 million. Adjusted operating
income as a percentage of net sales was 21.4% for the third quarter
of fiscal 2019 compared to an adjusted 20.6% for the same period
last year.
Interest expense, net was $1.2 million for the third quarter of
fiscal 2019 compared to $1.8 million for the same period last
year.
Income tax expense for the third quarter of fiscal 2019 was $2.8
million compared to $7.5 million for the same period last year. The
effective income tax rate for the third quarter of fiscal 2019 was
15.0% compared to 23.9% for the same period last year. The
reduction in the effective income tax rate primarily reflects the
net benefits of the Tax Cuts and Jobs Act, $4.0 million of benefit
associated with the sale of the Miami division, $1.5 million of
discrete tax benefit due to a decrease in reserves for unrecognized
tax positions pertaining primarily to the statute of limitations
expiration of items associated with the consolidation and
restructuring of the Company’s U.K. manufacturing facility, offset
by $0.9 million of tax withholding associated with the repatriation
of cash from our foreign operations, and $0.6 million of benefit
associated with share-based compensation compared to $1.2 million
of share-based compensation benefit for the same period last
year.
Net income for the third quarter of fiscal 2019 was $16.2
million compared to $23.8 million for the same period last year. On
an adjusted basis, net income was $28.5 million for the third
quarter of fiscal 2019, compared to $25.7 million for the same
period last year.
Diluted EPS for the third quarter of fiscal 2019 was $0.65 per
share compared to $0.97 per share for the same period last year. On
an adjusted basis, diluted EPS for the third quarter of fiscal 2019
was $1.15 per share compared to an adjusted diluted EPS of $1.05
per share for the same period last year, an increase of 9.5%.
Backlog as of December 29, 2018 was $428.2 million compared to
$392.5 million as of December 30, 2017.
Intercompany Dividend Schaublin
Holdings SA to Roller Bearing Company of America, Inc.In
December 2018, the Company transferred $28.0 million of cash from
its Switzerland Division to its U.S. Division in the form of an
intercompany dividend. Associated with this dividend was a net tax
withholding of $0.9 million.
Sale of the Avborne Accessory Group,
Inc. - Miami divisionIn the third quarter of fiscal
2019, the Company sold its subsidiary, Avborne Accessory Group,
Inc., located in Miami, FL for approximately $22.3 million, subject
to a final working capital adjustment. Prior to the sale, the
Company spun off the Avborne Accessory Group, Inc. – Franklin, IN
division into a separate legal entity, which the Company retained.
The Company recorded an after-tax loss of $12.8 million, comprised
of $22.3 million of proceeds received, less $12.0 million in net
assets and transaction expenses, and a write-off of $27.1 million
in goodwill and intangibles, offset by a $4.0 million tax benefit.
In fiscal 2019 the Miami division contributed $11.3 million in net
sales and $0.1 million in operating income through the close date
of the sale on November 28, 2018.
Outlook for the Fourth Quarter Fiscal
2019The Company expects net sales to be approximately
$178.0 million to $180.0 million in the fourth quarter of fiscal
2019.
Live WebcastRBC 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
# 5770536. An audio replay of the call will be available from 1:30
p.m. ET February 5th, 2019 until 12:30 p.m. ET February 12th, 2019.
The replay can be accessed by dialing 855-859-2056 (international
callers dial 404-537-3406) and providing conference call ID #
5770536. Investors are advised to dial into the call at least ten
minutes prior to the call to register.
Non-GAAP Financial
MeasuresIn 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 GAAP. A reconciliation of the non-GAAP measures
disclosed in this press release with the most comparable GAAP
measures are included in the financial table attached to this press
release.
About RBC BearingsRBC
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
StatementsCertain 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
following: 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,” “would,” “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, 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 29, December 30,
December 29, December 30, 2018 2017
2018 2017 Net sales $ 171,453 $ 166,858 $
520,354 $ 495,072 Cost of sales 103,326
102,086 316,669 306,366 Gross
margin 68,127 64,772 203,685 188,706 Operating expenses:
Selling, general and administrative 29,142 28,162 88,043 83,535
Other, net 19,147 3,328 23,922
14,493 Total operating expenses 48,289 31,490
111,965 98,028 Operating income 19,838 33,282 91,720 90,678
Interest expense, net 1,197 1,761 4,354 5,704 Other
non-operating (income) expense (386 ) 185
984 939 Income before income taxes
19,027 31,336 86,382 84,035 Provision for income taxes 2,849
7,504 12,626 23,571
Net income $ 16,178 $ 23,832 $ 73,756 $
60,464 Net income per common share: Basic $ 0.66 $
0.99 $ 3.03 $ 2.53 Diluted $ 0.65 $ 0.97 $ 2.99 $ 2.49
Weighted average common shares: Basic 24,457,555 23,985,925
24,308,029 23,912,474 Diluted 24,800,647 24,446,115 24,693,015
24,322,165
Three Months Ended Nine Months
Ended Reconciliation of Reported Operating Income to
December 29, December 30, December 29,
December 30, Adjusted Operating Income: 2018
2017 2018 2017 Reported operating
income $ 19,838 $ 33,282 $ 91,720 $ 90,678 Net loss on sale of
Miami Division 16,802 - 16,802 - Integration and restructuring
- 1,091 - 7,585
Adjusted operating income $ 36,640 $ 34,373 $
108,522 $ 98,263
Reconciliation of
Reported Net Income and Net Income Three Months Ended
Nine Months Ended Per Common Share to Adjusted Net Income
and December 29, December 30, December 29,
December 30, Adjusted Net Income Per Common Share:
2018 2017 2018 2017 Reported net
income $ 16,178 $ 23,832 $ 73,756 $ 60,464 Net loss on sale of
Miami Division (1) 12,754 - 12,754 - Integration and restructuring
(1) - 1,091 - 6,668 Foreign exchange translation loss (gain) (1)
(58 ) (47 ) (48 ) 150 TCJA repatriation transition tax - 9,491 -
9,491 TCJA revaluation of deferred tax liabilities - (8,708 ) -
(8,708 ) Loss on extinguishment of long term debt (1) - - 815 -
Withholding tax associated with repatriation of cash 943 - 943 -
Discrete tax reserve loss (benefit) (1,347 ) 45
(1,420 ) (137 ) Adjusted net income $ 28,470
$ 25,704 $ 86,800 $ 67,928 (1) After
tax impact. Adjusted net income per common share: Basic $
1.16 $ 1.07 $ 3.57 $ 2.84 Diluted $ 1.15 $ 1.05 $ 3.52 $ 2.79
Weighted average common shares: Basic 24,457,555 23,985,925
24,308,029 23,912,474 Diluted 24,800,647 24,446,115 24,693,015
24,322,165
Three Months Ended Nine
Months Ended December 29, December 30,
December 29, December 30, Segment Data, Net
External Sales: 2018 2017 2018 2017
Plain bearings segment $ 79,306 $ 69,764 $ 235,311 $ 214,809
Roller bearings segment 34,841 32,485 107,711 96,215 Ball bearings
segment 16,720 16,496 52,832 48,756 Engineered products segment
40,586 48,113 124,500
135,292 $ 171,453 $ 166,858 $ 520,354
$ 495,072
Three Months
Ended Nine Months Ended December 29, December
30, December 29, December 30, Selected
Financial Data: 2018 2017 2018 2017
Depreciation and amortization $ 7,310 $ 6,958 $ 22,262 $
21,196 Share-based stock compensation expense $ 3,904 $
3,267 $ 11,709 $ 9,897 Adjusted operating income plus
depreciation/amortization plus
incentive stock compensation expense $ 47,854 $ 44,598 $ 142,493 $
129,356 Cash provided by operating activities $
21,148 $ 28,534 $ 79,013 $ 92,496 Capital expenditures $
11,459 $ 7,875 $ 29,205 $ 20,542 Total debt $ 114,551 $
197,953 Cash and short-term investments $ 81,697 $ 43,822
Total debt minus cash and short-term investments $ 32,854 $
154,131 Repurchase of common stock $ 4,711 $ 4,933
Backlog $ 428,231 $ 392,462
*The Company retrospectively adopted ASU No. 2017-07,
“Compensation – Retirement Benefits (Topic 715): Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost” on April 1, 2018. The adoption of this
ASU resulted in the reclassification of $159 of net periodic
benefit cost from compensation costs ($107 included within cost of
sales and $52 within other, net) to other non-operating expense on
the consolidated statement of operations for the three-month period
ended December 30, 2017 and $477 of net periodic benefit cost from
compensation costs ($321 included within cost of sales and $156
within other, net) to other non-operating expense on the
consolidated statement of operations for the nine-month period
ended December 30, 2017.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190205005192/en/
RBC BearingsErnest
Hawkins203-267-5010Ehawkins@rbcbearings.comAlpha IR GroupMichael
Cummings617-461-1101investors@rbcbearings.com
RBC Bearings (NASDAQ:ROLL)
Historical Stock Chart
From Aug 2024 to Sep 2024
RBC Bearings (NASDAQ:ROLL)
Historical Stock Chart
From Sep 2023 to Sep 2024