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 fourth quarter of fiscal
year 2020.
Key Highlights
- Fourth quarter adjusted gross margin as a percentage of sales
of 41.3% represents an increase of 120 basis points over the same
period last year - Fourth quarter adjusted operating income as a
percentage of sales of 23.1% increased 50 basis points over the
prior year period - Fourth quarter cash flow from operations less
capital expenditures was $34.7 million and $118.3 million for the
full fiscal year
Fourth Quarter Financial
Highlights
($ in millions)
Fiscal 2020
Fiscal 2019
Change
GAAP
Adjusted (1)
GAAP
Adjusted (1)
GAAP
Adjusted (1)
Net sales
$185.8
$182.2
2.0%
Gross margin
$76.6
$76.7
$73.0
$73.0
5.0%
5.1%
Gross margin %
41.2%
41.3%
40.1%
40.1%
Operating income
$43.5
$43.0
$40.3
$41.2
7.9%
4.2%
Operating income %
23.4%
23.1%
22.1%
22.6%
Net income
$33.8
$33.1
$31.4
$32.9
7.4%
0.8%
Diluted EPS
$1.35
$1.33
$1.27
$1.33
6.3%
0.0%
(1) Results exclude items in
reconciliation below.
Twelve Month Financial
Highlights
($ in millions)
Fiscal 2020
Fiscal 2019
Change
GAAP
Adjusted (1)
GAAP
Adjusted (1)
GAAP
Adjusted (1)
Net sales
$727.5
$702.5
3.6%
Gross margin
$289.1
$289.5
$276.7
$276.7
4.5%
4.6%
Gross margin %
39.7%
39.8%
39.4%
39.4%
Operating income
$156.8
$157.7
$132.0
$149.8
18.7%
5.3%
Operating income %
21.6%
21.7%
18.8%
21.3%
Net income
$126.0
$126.4
$105.2
$119.7
19.8%
5.6%
Diluted EPS
$5.06
$5.07
$4.26
$4.84
18.8%
4.8%
(1) Results exclude items in
reconciliation below.
“The Company ended fiscal 2020 with solid execution and
performance in the fourth quarter under highly unusual
circumstances,” said Dr. Michael J. Hartnett, Chairman and Chief
Executive Officer. “We enter fiscal 2021 from a position of
strength, with a healthy backlog, ample liquidity and a strong
balance sheet. While we continue to evaluate the impacts of
COVID-19 across our end markets, our strong balance sheet and other
liquidity options provide us many tools to effectively navigate
this environment and achieve our operational goals.”
Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2020 were $185.8
million, an increase of 2.0% from $182.2 million in the fourth
quarter of fiscal 2019, and organic net sales increased 0.6% year
over year. Net sales for the aerospace markets increased 4.3% while
industrial market net sales declined 1.9%, 5.6% on an organic
basis. Gross margin for the fourth quarter of fiscal 2020 was $76.6
million compared to $73.0 million for the same period last year.
Excluding $0.1 million of inventory purchase accounting adjustments
related to the acquisition of Swiss Tool, adjusted gross margin as
a percentage of net sales was 41.3% in the fourth quarter of fiscal
2020 compared to 40.1% for the same period last year.
SG&A for the fourth quarter of fiscal 2020 was $31.0
million, an increase of $1.5 million from $29.5 million for the
same period last year. The increase was primarily due to $0.8
million of additional share-based stock compensation costs and
additional personnel-related costs of $0.8 million offset by $0.1
million of other items. As a percentage of net sales, SG&A was
16.7% for the fourth quarter of fiscal 2020 compared to 16.2% for
the same period last year.
Other operating expenses for the fourth quarter of fiscal 2020
totaled $2.1 million compared to $3.2 million for the same period
last year. For the fourth quarter of fiscal 2020, other operating
expenses consisted primarily of $2.6 million of amortization of
intangible assets, $0.8 million of restructuring costs and $0.1
million of other items offset by a $1.4 million gain on the sale of
a surplus building. For the fourth quarter of fiscal 2019, other
operating expenses were comprised mainly of $2.3 million in
amortization of intangible assets and $0.9 million of restructuring
expense.
Operating income for the fourth quarter of fiscal 2020 was $43.5
million compared to $40.3 million for the same period last year.
Excluding $0.1 million of inventory purchase accounting adjustments
related to the acquisition of Swiss Tool, other restructuring
charges of $0.8 million, and a $1.4 million gain on sale of a
surplus building, adjusted operating income for the fourth quarter
of fiscal 2020 was $43.0 million. Excluding costs associated with
restructuring in the fourth quarter of fiscal 2019, adjusted
operating income was $41.2 million. Adjusted operating income as a
percentage of net sales was 23.1% for the fourth quarter of fiscal
2020 compared to 22.6% for the same period last year. On a full
year basis, fiscal 2020 year-to-date adjusted operating income as a
percentage of net sales was 21.7% compared to 21.3% for the same
period last year.
Interest expense, net was $0.4 million for the fourth quarter of
fiscal 2020 compared to $0.8 million for the same period last
year.
Income tax expense for the fourth quarter of fiscal 2020 was
$9.2 million compared to $8.3 million for the same period last
year. The effective income tax rate for the fourth quarter of
fiscal 2020 was 21.4% compared to 20.8% for the same period last
year. The current quarter income tax expense included approximately
$0.4 million of benefit from share-based stock compensation and
$0.4 million of net benefit associated with discrete and other tax
items. Income tax expense for the same period last year was
impacted by $0.6 million of benefit associated with share-based
stock compensation offset by $0.8 million of discrete and other tax
reserves.
Net income for the fourth
quarter of fiscal 2020 was $33.8 million compared to $31.4 million
for the same period last year. On an adjusted basis, net income was
$33.1 million for the fourth quarter of fiscal 2020 compared to
$32.9 million for the same period last year.
Diluted EPS for the fourth
quarter of fiscal 2020 was $1.35 per share compared to $1.27 per
share for the same period last year. On an adjusted basis, diluted
EPS was $1.33 for both the fourth quarter of fiscal 2020 and the
same period last year.
Backlog as of March 28, 2020 was $478.6 million compared to
$445.1 million as of March 30, 2019.
Sale of Houston Building
In the fourth quarter of fiscal 2020, the Company sold its
manufacturing building located in Houston, TX that was associated
with a previously closed facility. The Company sold the building
for approximately $8.0 million and recorded a book gain of $1.4
million in the fourth quarter of fiscal 2020.
COVID-19
The COVID-19 health crisis, which was declared a pandemic in
March 2020, has led to governments around the world implementing
measures to reduce the spread. These measures include quarantines,
“shelter in place” orders, travel restrictions, and other measures
and have resulted in a slowdown of worldwide economic activity.
Our business is operating as an essential business, and as such,
our facilities have remained open, with the exception of a few
temporary closures at some of our international locations. The
COVID-19 pandemic impacted our commercial aerospace and industrial
sales in March of our fourth quarter of fiscal 2020. During this
period, our commercial aerospace sales also faced headwinds
associated with build rate changes on the Boeing 737 MAX.
In the fourth quarter of fiscal 2020, we did not experience
significant disruptions in our supply chain or with our customers
as a result of COVID-19. We anticipate that our production and
sales in fiscal 2021 will be negatively affected by the economic
implications of the pandemic. Commercial aerospace OEM and
aftermarket, which make up approximately half of our sales
annually, will be impacted by the decline in air travel and changes
in production rates. Our sales to defense markets, which represent
approximately one quarter of total sales, will grow over the next
year. Our sales to industrial markets will be adversely affected in
the first two quarters of fiscal 2021 due to the slowdown of
economic activity. We expect to see demand increasing as “shelter
in place” directives are eliminated. Management is continuously
evaluating the status of our orders and operations, and
restructuring efforts are being implemented where necessary to
align our cost structure to the new demand levels we experience in
the marketplace.
Liquidity
The Company ended fiscal 2020 with a strong cash balance and
liquidity position. Cash at March 28, 2020 was $103.3 million and
the Company had approximately $259.1 million of undrawn revolving
credit on its two bank facilities. The Company ended the year with
total debt of $23.0 million and is in full compliance with all
covenants under its credit agreements.
Outlook for the First Quarter Fiscal
2021
The Company expects net sales to be approximately $150.0 million
to $155.0 million in the first quarter of fiscal 2021, compared to
$182.7 million last year.
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 # 1387663. An
audio replay of the call will be available from 1:45 p.m. ET May
20, 2020 until 1:45 p.m. ET May 27, 2020. The replay can be
accessed by dialing 855-859-2056 (international callers dial
404-537-3406) and providing conference call ID # 1387663. 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
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 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 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, COVID-19 pandemic, 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
Twelve Months Ended
March 28,
March 30,
March 28,
March 30,
2020
2019
2020
2019
Net sales
$
185,843
$
182,162
$
727,461
$
702,516
Cost of sales
109,259
109,194
438,358
425,863
Gross margin
76,584
72,968
289,103
276,653
Operating expenses: Selling, general and administrative
30,985
29,461
122,565
117,504
Other, net
2,079
3,192
9,753
27,114
Total operating expenses
33,064
32,653
132,318
144,618
Operating income
43,520
40,315
156,785
132,035
Interest expense, net
399
819
1,885
5,173
Other non-operating expense (income)
180
(212
)
761
772
Income before income taxes
42,941
39,708
154,139
126,090
Provision for income taxes
9,189
8,271
28,103
20,897
Net income
$
33,752
$
31,437
$
126,036
$
105,193
Net income per common share: Basic
$
1.36
$
1.28
$
5.12
$
4.32
Diluted
$
1.35
$
1.27
$
5.06
$
4.26
Weighted average common shares: Basic
24,745,009
24,506,648
24,632,637
24,357,684
Diluted
24,994,189
24,786,898
24,922,631
24,716,213
Three Months Ended
Twelve Months Ended
Reconciliation of Reported Gross Margin to
March 28,
March 30,
March 28,
March 30,
Adjusted Gross Margin:
2020
2019
2020
2019
Reported gross margin
$
76,584
$
72,968
$
289,103
$
276,653
Inventory purchase accounting adjustment
97
-
368
-
Adjusted gross margin
$
76,681
$
72,968
$
289,471
$
276,653
Three Months Ended
Twelve Months Ended
Reconciliation of Reported Operating Income to
March 28,
March 30,
March 28,
March 30,
Adjusted Operating Income:
2020
2019
2020
2019
Reported operating income
$
43,520
$
40,315
$
156,785
$
132,035
Net loss on sale of Miami division
-
(258
)
-
16,544
Net gain on sale of Houston building
(1,440
)
-
(1,440
)
-
Inventory purchase accounting adjustment
97
-
368
-
Acquisition costs
-
-
901
-
Integration and restructuring
805
1,180
1,036
1,180
Adjusted operating income
$
42,982
$
41,237
$
157,650
$
149,759
Reconciliation of Reported Net Income and Net Income
Three Months Ended
Twelve Months Ended
Per Common Share to Adjusted Net Income and
March 28,
March 30,
March 28,
March 30,
Adjusted Net Income Per Common Share:
2020
2019
2020
2019
Reported net income
$
33,752
$
31,437
$
126,036
$
105,193
Net loss on sale of Miami division (1)
-
(258
)
-
12,496
Net gain on sale of Houston building (1)
(1,132
)
-
(1,132
)
-
Loss on extinguishment of long-term debt (1)
-
-
-
815
Withholding tax associated with repatriation of cash
-
-
-
943
Inventory purchase accounting adjustment (1)
76
-
303
-
Acquisition costs (1)
-
-
769
-
Integration and restructuring (1)
633
1,012
827
1,012
Foreign exchange translation loss (gain) (1)
229
(63
)
738
(111
)
Discrete and other tax items (benefit) loss
(425
)
753
(1,143
)
(667
)
Adjusted net income
$
33,133
$
32,881
$
126,398
$
119,681
(1) After tax impact. Adjusted net income per common share:
Basic
$
1.34
$
1.34
$
5.13
$
4.91
Diluted
$
1.33
$
1.33
$
5.07
$
4.84
Weighted average common shares: Basic
24,745,009
24,506,648
24,632,637
24,357,684
Diluted
24,994,189
24,786,898
24,922,631
24,716,213
Three Months Ended
Twelve Months Ended
March 28,
March 30,
March 28,
March 30,
Segment Data, Net External Sales:
2020
2019
2020
2019
Plain bearings segment
$
93,919
$
87,940
$
358,291
$
323,251
Roller bearings segment
31,369
36,121
132,642
143,832
Ball bearings segment
20,622
19,475
74,231
72,307
Engineered products segment
39,933
38,626
162,297
163,126
$
185,843
$
182,162
$
727,461
$
702,516
Three Months Ended
Twelve Months Ended
March 28,
March 30,
March 28,
March 30,
Selected Financial Data:
2020
2019
2020
2019
Depreciation and amortization
$
8,145
$
7,396
$
31,420
$
29,658
Share-based stock compensation expense
5,154
4,378
20,150
16,087
Adjusted operating income plus depreciation/amortization
plus share-based stock compensation expense
$
56,281
$
53,011
$
209,220
$
195,504
Cash provided by operating activities
$
44,426
$
29,534
$
155,621
$
108,547
Capital expenditures
$
9,735
$
12,141
$
37,297
$
41,346
Total debt
$
23,012
$
43,646
Cash and short-term investments
$
103,255
$
29,884
Repurchase of common stock
$
12,209
$
5,232
Backlog
$
478,582
$
445,099
Three Months Ended
Twelve Months Ended
March 28,
March 30,
March 28,
March 30,
Reconciliation of Total Net Sales to Organic Sales:
2020
2019
2020
2019
Net sales
$
185,843
$
182,162
$
727,461
$
702,516
Miami division - divestiture
-
-
-
(11,308
)
Swiss Tool - acquisition
(2,544
)
-
(6,357
)
-
Organic net sales
$
183,299
$
182,162
$
721,104
$
691,208
Three Months Ended
Twelve Months Ended
March 28,
March 30,
March 28,
March 30,
Reconciliation of Aerospace Net Sales to Organic Sales:
2020
2019
2020
2019
Net sales
$
119,397
$
114,453
$
469,246
$
431,133
Miami division - divestiture
-
-
-
(11,308
)
Organic net sales
$
119,397
$
114,453
$
469,246
$
419,825
Three Months Ended
Twelve Months Ended
March 28,
March 30,
March 28,
March 30,
Reconciliation of Industrial Net Sales to Organic Sales:
2020
2019
2020
2019
Net sales
$
66,446
$
67,709
$
258,215
$
271,383
Swiss Tool - acquisition
(2,544
)
-
(6,357
)
-
Organic net sales
$
63,902
$
67,709
$
251,858
$
271,383
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200520005151/en/
RBC Bearings Ernest Hawkins 203-267-5010
Ehawkins@rbcbearings.com
Alpha IR Group Michael Cummings 617-461-1101
investors@rbcbearings.com
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