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 2016.
Third Quarter
Highlights
($ in millions)
Fiscal 2016 Fiscal 2015
Change GAAP Adjusted (1)
GAAP Adjusted (1) GAAP Adjusted
(1) Net sales $ 144.2 $ 144.2 $ 106.3 $ 106.3 35.6 % 35.6 % Gross
margin $ 53.5 $ 54.1 $ 41.7 $ 41.7 28.5 % 29.8 % Gross margin %
37.1 % 37.5 % 39.2 % 39.2 % Operating income $ 27.1 $ 27.6 $ 20.6 $
22.2 31.4 % 24.5 % Operating income % 18.8 % 19.2 % 19.4 % 20.9 %
Net income $ 17.0 $ 17.3 $ 14.1 $ 14.4 21.3 % 19.7 % Diluted EPS $
0.73 $ 0.73 $ 0.60 $ 0.62 21.7 % 17.7 % (1) Results exclude items
in reconciliation below.
Nine Month
Highlights
($ in millions)
Fiscal 2016 Fiscal 2015
Change GAAP Adjusted (1) GAAP
Adjusted (1) GAAP Adjusted (1)
Net sales $ 435.2 $ 435.2 $ 331.9 $ 331.9 31.1 % 31.1 % Gross
margin $ 158.4 $ 165.6 $ 125.2 $ 128.9 26.5 % 28.4 % Gross margin %
36.4 % 38.0 % 37.7 % 38.9 % Operating income $ 73.0 $ 86.3 $ 63.1 $
71.1 15.7 % 21.4 % Operating income % 16.8 % 19.8 % 19.0 % 21.4 %
Net income $ 45.0 $ 53.6 $ 43.3 $ 46.9 3.8 % 14.1 % Diluted EPS $
1.91 $ 2.28 $ 1.85 $ 2.01 3.2 % 13.4 % (1) Results exclude items in
reconciliation below.
“Our third quarter results demonstrate solid operating
performance, while reflecting the typical fiscal third quarter
seasonality from fewer production days due to the holiday season,”
said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer.
“Continued strength in the aerospace sector in both commercial OEM
and aftermarket activity was partially offset by softness in some
industrial markets. The integration of the Sargent business is
going well and we remain confident in our prospects for continued
improvement in the performance of this business.”
Third Quarter ResultsNet
sales for the third quarter of fiscal 2016 were $144.2 million, an
increase of 35.6% from $106.3 million in the third quarter of
fiscal 2015. Net sales for the aerospace markets increased 67.0%,
offset by a 0.7% decrease in industrial markets. Gross margin for
the third quarter of fiscal 2016 was $53.5 million compared to
$41.7 million for the same period last year. Excluding the impact
of an inventory purchase accounting adjustment, gross margin would
have been $54.1 million compared to $41.7 million for the same
period last year. Adjusted gross margin as a percentage of net
sales would have been 37.5% in the third quarter of fiscal 2016
compared to 39.2% for the same adjusted period last year.
SG&A for the third quarter of fiscal 2016 was $23.9 million,
an increase of $4.6 million from $19.3 million for the same period
last year. The increase of $4.6 million was attributable to an
increase of $4.3 million associated with the acquisition of Sargent
Aerospace, $0.4 million in incentive stock compensation expenses,
$0.2 million due to personnel expenses offset by $0.3 million in
expense reductions. As a percentage of net sales, SG&A was
16.5% for the third quarter of fiscal 2016 compared to 18.1% for
the same period last year.
Other operating expenses for the third quarter of fiscal 2016
totaled $2.6 million, an increase of $0.8 million, compared to $1.8
million for the same period last year. For the third quarter of
fiscal 2016 other operating expenses consisted mainly of $2.5
million of amortization of intangibles and $0.1 million in costs
associated with the acquisition and other items. For the same
period last year, other operating expenses consisted of $0.4
million of amortization of intangibles, $1.5 million in costs
associated with acquisition activity, $0.1 million in costs
associated with consolidation and restructuring, offset by $0.2
million of other income.
Operating income for the third quarter of fiscal 2016 was $27.1
million compared to operating income of $20.6 million for the same
period last year. Excluding costs associated with acquisitions and,
integration and restructuring, operating income would have been
$27.6 million for the third quarter of fiscal 2016 compared to an
adjusted $22.2 million for the same period last year. Excluding
these adjustments, operating income as a percentage of net sales
would have been 19.2% compared to 20.9% for the same period last
year.
Net interest expense was $2.2 million for the third quarter of
fiscal 2016 compared to $0.3 million for the same period last
year.
Income tax expense for the third quarter of fiscal 2016 was $7.8
million compared to $6.1 million for the same period last year. Our
effective income tax rate for the third quarter of fiscal 2016 was
31.5% compared to 30.3% for the same period last year. The
effective income tax rates for the third quarter of fiscal 2016 and
fiscal 2015 include discrete tax benefits of $0.2 million and $0.7
million, respectively. The effective income tax rate without these
discrete tax items would have been 32.1% and 33.7%,
respectively.
Net income for the third quarter of fiscal 2016 was $17.0
million compared to $14.1 million for the same period last year. On
an adjusted basis, net income would have been $17.3 million for the
third quarter of fiscal 2016, compared to an adjusted net income of
$14.4 million for the same period last year.
Diluted EPS for the third quarter of fiscal 2016 was 73 cents
per share compared to 60 cents per share for the same period last
year. On an adjusted basis, diluted EPS for the third quarter of
fiscal 2016 would have been 73 cents per share compared to an
adjusted diluted EPS of 62 cents per share for the same period last
year, an increase of 17.7%.
Backlog as of December 26, 2015 was $351.3 million compared to
$217.5 million as of December 27, 2014.
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 877-788-4721
(international callers dial 530-379-4726) and provide conference ID
# 30608812. An audio replay of the call will be available from 2:00
p.m. ET February 3rd, 2016 until 11:59 p.m. ET February 10th, 2016.
The replay can be accessed by dialing 855-859-2056 (international
callers dial 404-537-3406) and providing conference call ID #
30608812. 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 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 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
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. Except as required by federal and
state securities laws, 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
27, December 26, December 27, 2015
2014 2015
2014 Net sales $ 144,216 $ 106,322 $ 435,220 $
331,861 Cost of sales 90,695 64,669
276,817 206,636 Gross margin 53,521
41,653 158,403 125,225 Operating expenses: Selling, general
and administrative 23,850 19,266 72,519 56,779 Other, net
2,619 1,798 12,872 5,349
Total operating expenses 26,469 21,064 85,391 62,128
Operating income 27,052 20,589 73,012 63,097 Interest
expense, net 2,238 288 6,222 820 Other non-operating (income)
expense (54 ) 146 (44 ) (356 )
Income before income taxes 24,868 20,155 66,834 62,633 Provision
for income taxes 7,821 6,104
21,864 19,314 Net income $ 17,047 $
14,051 $ 44,970 $ 43,319 Net income per
common share: Basic $ 0.73 $ 0.61 $ 1.94 $ 1.88 Diluted $ 0.73 $
0.60 $ 1.91 $ 1.85 Weighted average common shares: Basic
23,220,707 23,090,635 23,197,969 23,057,864 Diluted 23,492,321
23,376,480 23,508,348 23,369,308 Dividends per share $ - $ -
$ - $ 2.00
Three Months Ended Nine
Months Ended Reconciliation of Reported Gross Margin to
December 26, December 27, December 26,
December 27, Adjusted Gross Margin:
2015 2014 2015
2014 Reported gross margin $
53,521
$ 41,653 $ 158,403
$ 125,225 Inventory purchase accounting adjustment 562 - 7,188 -
Integration and restructuring - -
- 3,707 Adjusted gross margin $ 54,083
$ 41,653 $ 165,591 $ 128,932
Three Months Ended Nine
Months Ended Reconciliation of Reported Operating Income
to December 26, December 27, December 26,
December 27, Adjusted Operating Income:
2015 2014 2015
2014 Reported operating income $
27,052
$ 20,589 $ 73,012
$ 63,097 Inventory purchase accounting adjustment 562 - 7,188 -
Integration and restructuring - 88 999 6,470 Acquisition costs
25 1,527 5,097
1,527 Adjusted operating income $ 27,639 $ 22,204
$ 86,296 $ 71,094
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 27, December 26, December 27,
Adjusted Net Income Per Common Share: 2015
2014 2015
2014 Reported net income $ 17,047
$ 14,051 $ 44,970
$ 43,319 Inventory purchase accounting adjustment (1) 385 $ - 4,789
$ - Integration and restructuring (1) - 58 666 6,440 Acquisition
costs (1) 17 1,012 3,402 1,012 Loss on extinguishment of debt (1) -
- 127 - Foreign exchange translation loss (gain) (1) (37 ) - (196 )
- Discrete tax loss (benefit) (154 ) (698 )
(204 ) (3,829 ) Adjusted net income $ 17,258 $ 14,423
$ 53,554 $ 46,942 (1) After tax impact.
Adjusted net income per common share: Basic $ 0.74 $ 0.62 $ 2.31 $
2.04 Diluted $ 0.73 $ 0.62 $ 2.28 $ 2.01 Weighted average
common shares: Basic 23,220,707 23,090,635 23,197,969 23,057,864
Diluted 23,492,321 23,376,480 23,508,348 23,369,308
Dividends per share $ - $ - $ - $ 2.00
Three Months Ended Nine Months Ended December
26, December 27, December 26, December 27,
Segment Data, Net External Sales: 2015
2014 2015
2014 Plain bearings segment $ 64,171 $ 53,770
$ 197,455 $ 171,101 Roller bearings segment 26,294 31,358 84,025
96,627 Ball bearings segment 12,850 14,038 38,791 41,676 Engineered
products segment 40,901 7,156
114,949 22,457 $ 144,216 $ 106,322
$ 435,220 $ 331,861
Three Months Ended Nine Months Ended
December 26, December 27, December 26,
December 27, Selected Financial Data:
2015 2014 2015
2014 Depreciation and
amortization $ 6,698 $ 3,778 $ 19,170 $ 11,845 Incentive
stock compensation expense $ 2,565 $ 2,196 $ 7,193 $ 6,231
Adjusted operating income plus depreciation/amortization
plus incentive stock compensation expense $
36,902 $ 28,178 $ 112,659 $ 89,170 Cash provided by
operating activities $ 21,540 $ 17,677 $ 61,800 $ 62,405
Capital expenditures $ 4,836 $ 4,412 $ 14,635 $ 15,870 Total
debt $ 384,974 $ 9,121 Cash and short-term investments $
44,403 $ 119,240 Cash dividends paid to shareholders $ - $
46,014 Repurchase of common stock $ 10,470 $ 7,049
Backlog $ 351,297 $ 217,525
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version on businesswire.com: http://www.businesswire.com/news/home/20160203005313/en/
RBC BearingsDaniel A. Bergeron,
203-267-5028dbergeron@rbcbearings.comorAlpha IR GroupMichael
Cummings, 617-461-1101investors@rbcbearings.com
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