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 2021.
Third Quarter Financial
Highlights
($ in millions)
Fiscal 2021
Fiscal 2020
Change
GAAP
Adjusted (1)
GAAP
Adjusted (1)
GAAP
Adjusted (1)
Net sales
$145.9
$177.0
-17.6%
Gross margin
$55.6
$56.4
$70.7
$70.9
-21.4%
-20.4%
Gross margin %
38.1%
38.7%
39.9%
40.1%
Operating income
$26.5
$27.9
$37.5
$37.8
-29.2%
-26.2%
Operating income %
18.2%
19.1%
21.2%
21.4%
Net income
$21.6
$22.7
$30.5
$30.4
-29.3%
-25.4%
Diluted EPS
$0.86
$0.90
$1.22
$1.22
-29.5%
-26.2%
(1) Results exclude items in
reconciliation below.
Nine Month Financial
Highlights
($ in millions)
Fiscal 2021
Fiscal 2020
Change
GAAP
Adjusted (1)
GAAP
Adjusted (1)
GAAP
Adjusted (1)
Net sales
$448.7
$541.6
-17.2%
Gross margin
$171.6
$174.5
$212.5
$212.8
-19.2%
-18.0%
Gross margin %
38.3%
38.9%
39.2%
39.3%
Operating income
$81.7
$87.7
$113.3
$114.7
-27.9%
-23.5%
Operating income %
18.2%
19.5%
20.9%
21.2%
Net income
$64.7
$69.5
$92.3
$93.3
-29.9%
-25.5%
Diluted EPS
$2.59
$2.78
$3.71
$3.75
-30.2%
-25.9%
(1) Results exclude items in
reconciliation below.
“I am pleased to report during the period we demonstrated very
good performance at all levels of the operating statements,” said
Michael J. Hartnett, Chairman and Chief Executive Officer. “This
resulted from outstanding expense control and execution coupled
with an expansion of demand for industrial products. Customer
requirements for aircraft products were stable and at the levels we
expected. Clearly we see this quarter as a turning point and
foreshadows a positive outlook for our fiscal 2022 as the economy
recovers from the pandemic.”
Third Quarter Results
Net sales for the third quarter of fiscal 2021 were $145.9
million, a decrease of 17.6% from $177.0 million in the third
quarter of fiscal 2020. Net sales for the aerospace markets
decreased 29.7% while industrial market net sales increased 5.5%.
Gross margin for the third quarter of fiscal 2021 was $55.6 million
compared to $70.7 million for the same period last year. On an
adjusted basis, gross margin for the third quarter of fiscal 2021
was $56.4 million compared to an adjusted $70.9 million for the
same quarter last year.
SG&A for the third quarter of fiscal 2021 was $25.7 million,
a decrease of $5.0 million from $30.7 million for the same period
last year. The decrease was primarily due to lower
personnel-related costs of $4.4 million and $0.6 million of other
items. As a percentage of net sales, SG&A was 17.6% for the
third quarter of fiscal 2021 compared to 17.4% for the same period
last year.
Other operating expenses for the third quarter of fiscal 2021
totaled $3.3 million compared to $2.5 million for the same period
last year. For the third quarter of fiscal 2021, other operating
expenses consisted primarily of $2.6 million of amortization of
intangible assets, $0.5 million of restructuring costs and related
items and $0.2 million of other items. For the third quarter of
fiscal 2020, other operating expenses were comprised mainly of $2.5
million in amortization of intangible assets.
Operating income for the third quarter of fiscal 2021 was $26.5
million compared to $37.5 million for the same period last year.
Excluding other restructuring charges and related items of $1.3
million, adjusted operating income for the third quarter of fiscal
2021 was $27.9 million compared to adjusted operating income of
$37.8 million for the third quarter of fiscal 2020. Adjusted
operating income as a percentage of net sales was 19.1% for the
third quarter of fiscal 2021 compared to 21.4% for the same period
last year.
Interest expense, net, was $0.3 million for the third quarter of
fiscal 2021 compared to $0.5 million for the same period last
year.
Income tax expense for the third quarter of fiscal 2021 was $4.7
million compared to $6.3 million for the same period last year. The
effective income tax rate for the third quarter of fiscal 2021 was
17.9% compared to 17.0% for the same period last year. The current
quarter income tax expense included $1.0 million of tax benefits
from share-based stock compensation. Income tax expense for the
same period last year was impacted by $0.9 million of benefit from
share-based stock compensation and $0.6 million of discrete tax
benefit due to a decrease in the reserves for unrecognized tax
positions pertaining primarily to the statute of limitations
expiration.
Net income for the third
quarter of fiscal 2021 was $21.6 million compared to $30.5 million
for the same period last year. On an adjusted basis, net income was
$22.7 million for the third quarter of fiscal 2021 compared to
$30.4 million for the same period last year.
Diluted EPS for the third
quarter of fiscal 2021 was $0.86 per share compared to $1.22 per
share for the same period last year. On an adjusted basis, diluted
EPS was $0.90 per share for the third quarter of fiscal 2021
compared to $1.22 per share for the same period last
year.
Backlog as of December 26, 2020 was $393.9 million compared to
$477.7 million as of December 28, 2019.
Restructuring and
Consolidation
During the third quarter of fiscal 2021, the Company continued
its efforts to consolidate certain manufacturing facilities to
increase efficiencies of our operations. This resulted in $1.7
million of restructuring charges incurred during the third quarter,
including $0.8 million of inventory rationalization costs included
within cost of sales, $0.4 million of fixed asset disposals
included within other operating costs, a $0.1 million lease
impairment charge, and $0.4 million of other items. The Company
anticipates additional costs associated with these consolidation
efforts of $0.5 million to $1.0 million to be incurred in the
fourth quarter of fiscal 2021 and the first quarter of fiscal
2022.
Liquidity
The Company ended the third quarter of fiscal 2021 with a strong
cash balance and liquidity position. Cash as of December 26, 2020
was $126.2 million and the Company had approximately $75.5 million
of marketable securities and $260.9 million of undrawn revolving
credit on its two bank facilities. The Company ended the third
quarter with total debt of $20.5 million and was in full compliance
with all covenants under its credit agreements.
Outlook for the Fourth Quarter Fiscal
2021
The Company expects net sales to be approximately $155.0 million
to $160.0 million in the fourth quarter of fiscal 2021, compared to
$185.8 million last year.
Live Webcast
RBC Bearings Incorporated will
host a webcast on Friday, January 29th at 11:00 a.m. ET 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
# 9150716. An audio replay of the call will be available from 1:45
p.m. ET January 29, 2021 until 1:45 p.m. ET February 5, 2021. The
replay can be accessed by dialing 855-859-2056 (international
callers dial 404-537-3406) and providing conference call ID #
9150716. 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
Nine Months Ended
December 26,
December 28,
December 26,
December 28,
2020
2019
2020
2019
Net sales
$
145,861
$
177,019
$
448,689
$
541,618
Cost of sales
90,273
106,308
277,052
329,099
Gross margin
55,588
70,711
171,637
212,519
Operating expenses: Selling, general and administrative
25,739
30,719
78,591
91,580
Other, net
3,308
2,526
11,328
7,674
Total operating expenses
29,047
33,245
89,919
99,254
Operating income
26,541
37,466
81,718
113,265
Interest expense, net
327
466
1,095
1,486
Other non-operating expense (income)
(50
)
217
203
581
Income before income taxes
26,264
36,783
80,420
111,198
Provision for income taxes
4,695
6,268
15,741
18,914
Net income
$
21,569
$
30,515
$
64,679
$
92,284
Net income per common share: Basic
$
0.87
$
1.24
$
2.61
$
3.75
Diluted
$
0.86
$
1.22
$
2.59
$
3.71
Weighted average common shares: Basic
24,861,792
24,699,461
24,816,451
24,595,179
Diluted
25,060,812
24,981,480
24,985,848
24,898,635
Three Months Ended
Nine Months Ended
Reconciliation of Reported Gross Margin to
December 26,
December 28,
December 26,
December 28,
Adjusted Gross Margin:
2020
2019
2020
2019
Reported gross margin
$
55,588
$
70,711
$
171,637
$
212,519
Inventory purchase accounting adjustment
-
187
-
271
Restructuring and consolidation
835
-
2,829
-
Adjusted gross margin
$
56,423
$
70,898
$
174,466
$
212,790
Three Months Ended
Nine Months Ended
Reconciliation of Reported Operating Income to
December 26,
December 28,
December 26,
December 28,
Adjusted Operating Income:
2020
2019
2020
2019
Reported operating income
$
26,541
$
37,466
$
81,718
$
113,265
Inventory purchase accounting adjustment
-
187
-
271
Acquisition costs
-
-
-
901
Restructuring and consolidation
1,341
147
5,974
231
Adjusted operating income
$
27,882
$
37,800
$
87,692
$
114,668
Reconciliation of Reported Net Income and Net Income
Three Months Ended
Nine Months Ended
Per Common Share to Adjusted Net Income and
December 26,
December 28,
December 26,
December 28,
Adjusted Net Income Per Common Share:
2020
2019
2020
2019
Reported net income
$
21,569
$
30,515
$
64,679
$
92,284
Inventory purchase accounting adjustment (1)
-
155
-
227
Acquisition costs (1)
-
-
-
769
Restructuring and consolidation (1)
1,101
122
4,777
194
Foreign exchange translation loss (1)
184
161
360
509
Discrete and other tax items benefit
(176
)
(567
)
(303
)
(718
)
Adjusted net income
$
22,678
$
30,386
$
69,513
$
93,265
(1) After tax impact. Adjusted net income per common share:
Basic
$
0.91
$
1.23
$
2.80
$
3.79
Diluted
$
0.90
$
1.22
$
2.78
$
3.75
Weighted average common shares: Basic
24,861,792
24,699,461
24,816,451
24,595,179
Diluted
25,060,812
24,981,480
24,985,848
24,898,635
Three Months Ended
Nine Months Ended
December 26,
December 28,
December 26,
December 28,
Segment Data, Net External Sales:
2020
2019
2020
2019
Plain bearings segment
$
69,321
$
86,876
$
219,249
$
264,372
Roller bearings segment
22,408
31,829
66,887
101,273
Ball bearings segment
20,675
18,475
60,614
53,609
Engineered products segment
33,457
39,839
101,939
122,364
$
145,861
$
177,019
$
448,689
$
541,618
Three Months Ended
Nine Months Ended
December 26,
December 28,
December 26,
December 28,
Selected Financial Data:
2020
2019
2020
2019
Depreciation and amortization
$
7,979
$
7,953
$
24,812
$
23,275
Share-based stock compensation expense
5,173
5,135
15,842
14,996
Adjusted operating income plus depreciation/amortization
plus share-based stock compensation expense
$
41,034
$
50,888
$
128,346
$
152,939
Cash provided by operating activities
$
36,107
$
46,577
$
110,586
$
111,195
Capital expenditures
$
2,801
$
7,346
$
8,809
$
27,562
Total debt
$
20,493
$
22,809
Cash and marketable securities
$
201,731
$
60,328
Repurchase of common stock
$
6,206
$
11,548
Backlog
$
393,934
$
477,702
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210129005067/en/
RBC Bearings Robert Sullivan 203-267-5014
Rsullivan@rbcbearings.com
Alpha IR Group Michael Cummings 617-461-1101
investors@rbcbearings.com
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