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 second quarter of fiscal
year 2016.
Second Quarter
Highlights
($ in millions)
Fiscal 2016 Fiscal
2015 Change GAAP Adjusted (1) GAAP
Adjusted (1) GAAP Adjusted (1) Net sales $148.7
$148.7 $112.6 $112.6 32.1% 32.1% Gross margin $52.1
$56.4 $39.8 $43.5 31.1% 29.8% Gross margin % 35.1% 37.9% 35.3%
38.6% Operating income $23.6 $29.2 $18.3 $24.7 29.0% 18.2%
Operating income % 15.9% 19.6% 16.3% 21.9% Net income $14.5 $17.8
$13.2 $16.5 9.6% 8.0% Diluted EPS $0.62 $0.76 $0.57 $0.70 8.8% 8.6%
(1) Results exclude items in reconciliation below.
Six Month Highlights
($ in millions)
Fiscal 2016 Fiscal
2015 Change GAAP Adjusted (1) GAAP
Adjusted (1) GAAP Adjusted (1) Net sales $291.0
$291.0 $225.5 $225.5 29.0% 29.0% Gross margin $104.9
$111.5 $83.6 $87.3 25.5% 27.8% Gross margin % 36.0% 38.3% 37.1%
38.7% Operating income $46.0 $58.7 $42.5 $48.9 8.1% 20.0% Operating
income % 15.8% 20.2% 18.8% 21.7% Net income $27.9 $36.3 $29.3 $32.5
-4.6% 11.6% Diluted EPS $1.19 $1.54 $1.25 $1.39 -4.8% 10.8% (1)
Results exclude items in reconciliation below.
“We achieved solid operating performance in the second quarter,”
said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer.
“During the quarter, we saw strength in the aerospace sector in
both commercial OEM and aftermarket activity. This performance was
partially offset by softness in defense and industrial markets. We
continue to be pleased with our progress on the Sargent integration
and expect to see continued improvement in the performance of this
business.”
Second Quarter Results
Net sales for the second quarter of fiscal 2016 were $148.7
million, an increase of 32.1% from $112.6 million in the second
quarter of fiscal 2015. Net sales for the aerospace markets
increased 59.6% offset by a 2.4% decrease in industrial markets.
Gross margin for the second quarter of fiscal 2016 was $52.1
million compared to $39.8 million for the same period last year.
Excluding the impact of an inventory purchase accounting adjustment
and consolidation and restructuring charge last year, gross margin
would have been $56.4 million compared to $43.5 million for the
same period last year. Adjusted gross margin as a percentage of net
sales would have been 37.9% in the second quarter of fiscal 2016
compared to 38.6% for the same adjusted period last year.
SG&A for the second quarter of fiscal 2016 was $24.9
million, an increase of $6.4 million from $18.5 million for the
same period last year. The increase of $6.4 million was primarily
attributable to an increase of $4.6 million associated with the
acquisition of Sargent Aerospace, $1.1 million in personnel-related
expenses, $0.3 million in professional fees, $0.2 million in
incentive stock compensation expenses and $0.2 million in other
items. As a percentage of net sales, SG&A was 16.8% for the
second quarter of fiscal 2016 compared to 16.5% for the same period
last year.
Other operating expenses for the second quarter of fiscal 2016
totaled $3.6 million, an increase of $0.7 million, compared to $2.9
million for the same period last year. For the second quarter of
fiscal 2016 other operating expenses consisted of $2.4 million of
amortization of intangibles and $0.2 million in costs associated
with integration and restructuring, $1.1 million in costs
associated with acquisitions, offset by $0.1 million of other
income. For the same period last year, other operating expenses
consisted of $0.5 million of amortization of intangibles, $2.7
million in costs associated with consolidation and restructuring,
offset by $0.3 million of other income.
Operating income for the second quarter of fiscal 2016 was $23.6
million compared to operating income of $18.3 million for the same
period last year. Excluding costs associated with acquisitions and
integration and restructuring, operating income would have been
$29.2 million for the second quarter of fiscal 2016 compared to an
adjusted $24.7 million for the same period last year. Excluding
these adjustments, operating income as a percentage of net sales
would have been 19.6% compared to 21.9% for the same period last
year.
Interest expense, net was $2.3 million for the second quarter of
fiscal 2016 compared to $0.3 million for the same period last
year.
Income tax expense for the second quarter of fiscal 2016 was
$7.4 million compared to $5.0 million for the same period last
year. Our effective income tax rate for the second quarter of
fiscal 2016 was 33.8% compared to 27.3% for the same period last
year. The effective income tax rates for the second quarter of
fiscal 2016 and fiscal 2015 include discrete tax benefits (losses)
of $(0.1) million and $3.1 million, respectively. The effective
income tax rate without these discrete tax items would have been
33.5% and 32.9%, respectively.
Net income for the second quarter of fiscal 2016 was $14.5
million compared to $13.2 million for the same period last year. On
an adjusted basis, net income would have been $17.8 million for the
second quarter of fiscal 2016, compared to an adjusted net income
of $16.5 million for the same period last year.
Diluted EPS for the second quarter of fiscal 2016 was 62 cents
per share compared to 57 cents per share for the same period last
year. On an adjusted basis, diluted EPS for the second quarter of
fiscal 2016 would have been 76 cents per share compared to an
adjusted diluted EPS of 70 cents per share for the same period last
year, an increase of 8.6%.
Backlog, as of September 26, 2015, was $347.8 million compared
to $218.0 million as of September 27, 2014 and $340.8 million as of
June 27, 2015.
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
877-788-4721 (international callers dial 530-379-4726) and enter
conference ID # 57226692. An audio replay of the call will be
available from 3:00 p.m. ET on Thursday, November 5th until 11:59
p.m. ET on Thursday, November 12th. The replay can be accessed by
dialing 855-859-2056 (international callers dial 404-537-3406) and
entering conference call ID # 57226692. 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 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, 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 Six Months Ended
September 26, September 27, September 26,
September 27, 2015 2014
2015 2014 Net
sales $ 148,696 $ 112,555 $ 291,004 $ 225,539 Cost of sales
96,578 72,804 186,122 141,967
Gross margin 52,118 39,751 104,882 83,572 Operating
expenses: Selling, general and administrative 24,944 18,517 48,669
37,513 Other, net 3,575 2,937
10,253 3,551 Total operating expenses 28,519 21,454
58,922 41,064 Operating income 23,599 18,297 45,960 42,508
Interest expense, net 2,273 308 3,984 532 Other
non-operating (income) expense (596 ) (235 )
10 (502 ) Income before income taxes 21,922 18,224 41,966
42,478 Provision for income taxes 7,403 4,976
14,043 13,210 Net income $ 14,519
$ 13,248 $ 27,923 $ 29,268 Net income
per common share: Basic $ 0.63 $ 0.57 $ 1.20 $ 1.27 Diluted $ 0.62
$ 0.57 $ 1.19 $ 1.25 Weighted average common shares: Basic
23,210,640 23,134,902 23,186,600 23,070,170 Diluted 23,495,285
23,424,421 23,516,537 23,394,439
Three
Months Ended Six Months Ended Reconciliation of
Reported Gross Margin to September 26,
September 27, September 26, September
27, Adjusted Gross Margin: 2015
2014 2015 2014 Reported
gross margin $ 52,118
$ 39,751 $ 104,882
$ 83,572 Inventory purchase accounting adjustment 4,295 - 6,626 -
Integration and restructuring - 3,707 -
3,707 Adjusted gross margin $ 56,413 $ 43,458 $ 111,508 $ 87,279
Three Months Ended Six
Months Ended Reconciliation of Reported Operating Income
to September 26, September 27, September
26, September 27, Adjusted Operating Income:
2015 2014 2015
2014 Reported operating income $ 23,599
$ 18,297 $ 45,960
$ 42,508 Inventory purchase accounting adjustment 4,295 - 6,626 -
Integration and restructuring 209 6,382 999 6,382 Acquisition costs
1,074 - 5,072 - Adjusted operating
income $ 29,177 $ 24,679 $ 58,657 $ 48,890
Reconciliation of Reported Net Income and Net Income
Three Months Ended Six Months Ended Per Common
Share to Adjusted Net Income and September 26,
September 27, September 26, September
27, Adjusted Net Income Per Common Share:
2015 2014 2015
2014 Reported net income $
14,519
$ 13,248 $ 27,923
$ 29,268 Inventory purchase accounting adjustment (1) 2,845 $ -
4,404 $ - Integration and restructuring (1) 138 6,382 666 6,382
Acquisition costs (1) 711 - 3,385 - Loss on extinguishment of debt
(1) - - 127 - Foreign exchange translation loss (gain) (1) (437 ) -
(159 ) - Discrete tax loss (benefit) 51 (3,131
) (50 ) (3,131 ) Adjusted net income $ 17,827
$ 16,499 $ 36,296 $ 32,519 (1) After tax
impact. Adjusted net income per common share: Basic $ 0.77 $
0.71 $ 1.57 $ 1.41 Diluted $ 0.76 $ 0.70 $ 1.54 $ 1.39
Weighted average common shares: Basic 23,210,640 23,134,902
23,186,600 23,070,170 Diluted 23,495,285 23,424,421 23,516,537
23,394,439
Three Months Ended Six
Months Ended September 26, September 27,
September 26, September 27, Segment Data,
Net External Sales: 2015 2014
2015 2014 Plain bearings segment
$ 67,607 $ 57,458 $ 133,284 $ 117,331 Roller bearings segment
27,151 33,504 57,731 65,269 Ball bearings segment 13,122 14,093
25,941 27,638 Engineered products segment 40,816
7,500 74,048 15,301 $ 148,696 $ 112,555 $ 291,004 $
225,539
Three Months Ended Six
Months Ended September 26, September 27,
September 26, September 27, Selected
Financial Data: 2015 2014
2015 2014 Depreciation and amortization
$ 6,809 $ 4,009 $ 12,472 $ 8,067 Incentive stock
compensation expense $ 2,496 $ 2,268 $ 4,628 $ 4,035
Adjusted operating income plus depreciation/amortization
plus incentive stock compensation expense $
38,482 $ 30,956 $ 75,757 $ 60,992 Cash provided by
operating activities $ 18,071 $ 17,807 $ 40,260 $ 44,728
Capital expenditures $ 4,529 $ 7,970 $ 9,799 $ 11,458 Total
debt $ 402,298 $ 9,574 Cash and short-term investments $
44,077 $ 109,447 Cash dividends paid to shareholders $ - $
46,014 Repurchase of common stock $ 7,698 $ 4,721
Backlog $ 347,792 $ 217,955
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version on businesswire.com: http://www.businesswire.com/news/home/20151105005106/en/
RBC BearingsDaniel A. Bergeron,
203-267-5028dbergeron@rbcbearings.comorAlpha IR GroupMichael
Cummings, 617-461-1101investors@rbcbearings.com
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