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 2017.
Third Quarter
Highlights
($ in millions)
Fiscal 2017 Fiscal 2016
Change GAAP Adjusted (1) GAAP
Adjusted (1) GAAP Adjusted (1) Net sales $146.7
$146.7 $144.2 $144.2 1.7% 1.7% Gross margin $52.4 $55.6 $53.5 $54.1
-2.1% 2.8% Gross margin % 35.7% 37.9% 37.1% 37.5% Operating income
$20.5 $27.6 $27.1 $27.6 -24.1% -0.2% Operating income % 14.0% 18.8%
18.8% 19.2% Net income $12.8 $17.4 $17.0 $17.3 -25.1% 0.6% Diluted
EPS $0.54 $0.73 $0.73 $0.73 -26.0% 0.0%
(1) Results exclude items in reconciliation below.
Nine Month
Highlights
($ in millions)
Fiscal 2017 Fiscal 2016
Change GAAP Adjusted (1) GAAP
Adjusted (1) GAAP Adjusted (1) Net sales $455.2
$455.2 $435.2 $435.2 4.6% 4.6% Gross margin $166.4 $170.0 $158.4
$165.6 5.0% 2.6% Gross margin % 36.5% 37.3% 36.4% 38.0% Operating
income $79.3 $87.0 $73.0 $86.3 8.6% 0.8% Operating income % 17.4%
19.1% 16.8% 19.8% Net income $49.0 $53.8 $45.0 $53.6 9.0% 0.5%
Diluted EPS $2.07 $2.27 $1.91 $2.28 8.4% -0.4%
(1) Results exclude items in reconciliation below.
“We were able to drive solid financial performance in what is
traditionally our slowest seasonal fiscal quarter,” said Dr.
Michael J. Hartnett, Chairman and Chief Executive Officer. “Our
restructuring activities are driven by a strategy to achieve better
alignment and rationalization of our manufacturing resources to
more efficiently support a period of increasing industrial
demand.”
Third Quarter ResultsNet
sales for the third quarter of fiscal 2017 were $146.7 million, an
increase of 1.7% from $144.2 million in the third quarter of fiscal
2016. Net sales for the aerospace markets increased 1.2% and the
industrial markets increased 2.7%. Gross margin for the third
quarter of fiscal 2017 was $52.4 million compared to $53.5 million
for the same period last year. Excluding the impact of integration
and restructuring and an inventory purchase accounting adjustment
last year, gross margin would have been $55.6 million compared to
$54.1 million for the same period last year. Adjusted gross margin
as a percentage of net sales would have been 37.9% in the third
quarter of fiscal 2017 compared to 37.5% for the same adjusted
period last year.
SG&A for the third quarter of fiscal 2017 was $25.7 million,
an increase of $1.8 million from $23.9 million for the same period
last year. The increase of $1.8 million was mainly due to $0.9
million in personnel related costs, $0.4 million incentive stock
compensation, $0.2 million in professional fees, and $0.3 million
of other items. As a percentage of net sales, SG&A was 17.5%
for the third quarter of fiscal 2017 compared to 16.5% for the same
period last year.
Other operating expenses for the third quarter of fiscal 2017
totaled $6.1 million, an increase of $3.5 million, compared to $2.6
million for the same period last year. For the third quarter of
fiscal 2017, other operating expenses were comprised mainly of $3.8
million of integration and restructuring costs and $2.3 million of
amortization of intangible assets. Other operating expenses last
year consisted primarily of $2.5 million in amortization of
intangibles and $0.1 million of other items.
Operating income for the third quarter of fiscal 2017 was $20.5
million compared to operating income of $27.1 million for the same
period last year. Excluding costs associated with integration and
restructuring, operating income would have been $27.6 million for
the third quarter of fiscal 2017 compared to an adjusted $27.6
million for the same period last year. Excluding these adjustments,
operating income as a percentage of net sales would have been 18.8%
compared to 19.2% for the same period last year.
Interest expense, net was $2.1 million for the third quarter of
fiscal 2017 compared to $2.2 million for the same period last
year.
Income tax expense for the third quarter of fiscal 2017 was $5.9
million compared to $7.8 million for the same period last year. Our
effective income tax rate for the third quarter of fiscal 2017 was
31.5% compared to 31.5% for the same period last year. The
effective income tax rate without discrete tax benefit items would
have been 31.8% and 32.1%, respectively.
Net income for the third quarter of fiscal 2017 was $12.8
million compared to $17.0 million for the same period last year. On
an adjusted basis, net income would have been $17.4 million for the
third quarter of fiscal 2017, compared to an adjusted net income of
$17.3 million for the same period last year.
Diluted EPS for the third quarter of fiscal 2017 was 54 cents
per share compared to 73 cents per share for the same period last
year. On an adjusted basis, diluted EPS for the third quarter of
fiscal 2017 would have been 73 cents per share compared to an
adjusted diluted EPS of 73 cents per share for the same period last
year.
Backlog, as of December 31, 2016, was $349.1 million compared to
$351.3 million as of December 26, 2015.
Integration and Restructuring of
Industrial OperationsIn the third quarter of fiscal
2017, the Company reached a decision to integrate and restructure
its industrial manufacturing operation in South Carolina. The
Company will exit a few smaller product offerings and consolidate
two manufacturing facilities into one. These restructuring efforts
will better align our manufacturing capacity and market focus. As a
result the Company recorded a charge of $7.1 million associated
with the integration and restructuring activity attributable to the
Roller Bearings segment. The $7.1 million charge includes $3.2
million of inventory rationalization costs, $2.4 million loss on
fixed asset disposals, $1.2 million exit obligation associated with
a building operating lease, and $0.3 million impairment of
intangible assets. The inventory rationalization costs were
recorded in “Cost of Sales” and all other costs were recorded in
“Other, net” in the income statement.
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
# 58476776. An audio replay of the call will be available from 2:00
p.m. ET February 8th, 2017 until 11:59 p.m. ET February 15th, 2017.
The replay can be accessed by dialing 855-859-2056 (international
callers dial 404-537-3406) and providing conference call ID #
58476776. Investors are advised to dial into the call at least ten
minutes prior to the call to register.
Non-GAAP Financial
MeasuresThe Company prepares and publicly releases
quarterly unaudited financial statements prepared in accordance
with U.S. GAAP. In accordance with the Securities and Exchange
Commission (the “SEC”) guidance on Compliance and Disclosure
Interpretations, the Company also discloses and discusses certain
non-GAAP financial measures in our public releases which are
identified as “adjusted” that exclude certain items. Management
uses these non-GAAP financial measures to provide additional
information which is useful to gain an understanding of the factors
and trends affecting our business. Management believes these
disclosures assist in understanding the trends of our operating
performance when comparing periods both historically and
prospectively. As a result, the Company also believes disclosure of
these non-GAAP measures helps investors evaluate the business in
the same manner as Management. The non-GAAP measures disclosed
within this press release exclude certain items that arise outside
the ordinary course of the Company’s continuing operations,
including, but not limited to, integration and restructuring
charges, acquisition costs, gains and losses on foreign exchange,
and non-discrete tax benefits and expenses. Investors should
consider non-GAAP measures in addition to, not as a substitute for,
financial measures prepared in accordance with U.S. GAAP. A
reconciliation of the non-GAAP measures disclosed in the press
release with the most comparable U.S. GAAP measures are included in
the financial tables 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,
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 31, December
26, December 31, December 26, 2016
2015 2016 2015 Net sales $ 146,656 $
144,216 $ 455,178 $ 435,220 Cost of sales 94,271
90,695 288,811 276,817
Gross margin 52,385 53,521 166,367 158,403 Operating
expenses: Selling, general and administrative 25,712 23,850 76,696
72,519 Other, net 6,144 2,619
10,367 12,872 Total operating expenses 31,856
26,469 87,063 85,391 Operating income 20,529 27,052 79,304
73,012 Interest expense, net 2,111 2,238 6,659 6,222 Other
non-operating (income) expense (216 ) (54 ) 51
(44 ) Income before income taxes 18,634 24,868 72,594
66,834 Provision for income taxes 5,864 7,821
23,556 21,864 Net income $
12,770 $ 17,047 $ 49,038 $ 44,970
Net income per common share: Basic $ 0.54 $ 0.73 $ 2.09 $
1.94 Diluted $ 0.54 $ 0.73 $ 2.07 $ 1.91 Weighted average
common shares: Basic 23,581,921 23,220,707 23,457,717 23,197,969
Diluted 23,813,780 23,492,321 23,719,121 23,508,348
Three Months Ended Nine Months
Ended Reconciliation of Reported Gross Margin to
December 31, December 26, December 31,
December 26, Adjusted Gross Margin: 2016
2015 2016 2015 Reported gross margin $
52,385 # $ 53,521 $ 166,367 # $ 158,403 Inventory purchase
accounting adjustment - 562 382 7,188 Integration and restructuring
3,215 - 3,215 -
Adjusted gross margin $ 55,600 $ 54,083 $
169,964 $ 165,591
Three Months Ended Nine Months Ended
Reconciliation of Reported Operating Income to December
31, December 26, December 31, December 26,
Adjusted Operating Income:
2016 2015 2016 2015 Reported
operating income $ 20,529 # $ 27,052 $ 79,304 # $ 73,012 Inventory
purchase accounting adjustment - 562 382 7,188 Integration and
restructuring 7,060 - 7,282 999 Acquisition costs -
25 - 5,097 Adjusted
operating income $ 27,589 $ 27,639 $ 86,968 $
86,296
Reconciliation
of Reported Net Income and Net Income Three Months Ended
Nine Months Ended Per Common Share to Adjusted Net Income
and December 31, December 26, December 31,
December 26, Adjusted Net Income Per Common Share:
2016 2015 2016 2015 Reported net
income $ 12,770 # $ 17,047 $ 49,038 # $ 44,970 Inventory purchase
accounting adjustment (1) - 385 257 4,789 Integration and
restructuring (1) 4,838 - 4,987 666 Acquisition costs (1) - 17 -
3,402 Loss on extinguishment of debt (1) - - - 127 Foreign exchange
translation loss (gain) (1) (199 ) (37 ) (199 ) (196 ) Discrete tax
loss (benefit) (56 ) (154 ) (238 ) (204
) Adjusted net income $ 17,353 $ 17,258 $ 53,845
$ 53,554 (1) After tax impact based on applicable
effective tax rate. Adjusted net income per common share:
Basic $ 0.74 $ 0.74 $ 2.30 $ 2.31 Diluted $ 0.73 $ 0.73 $ 2.27 $
2.28 Weighted average common shares: Basic 23,581,921
23,220,707 23,457,717 23,197,969 Diluted 23,813,780 23,492,321
23,719,121 23,508,348
Three
Months Ended Nine Months Ended December 31,
December 26, December 31, December 26,
Segment Data, Net External Sales: 2016 2015
2016 2015 Plain bearings segment $ 65,822 $
64,171 $ 205,107 $ 197,455 Roller bearings segment 26,157 26,294
80,786 84,025 Ball bearings segment 13,700 12,850 41,979 38,791
Engineered products segment 40,977 40,901
127,306 114,949 $ 146,656
$ 144,216 $ 455,178 $ 435,220
Three Months Ended Nine Months Ended
December 31, December 26, December 31,
December 26, Selected Financial Data: 2016
2015 2016 2015 Depreciation and
amortization $ 6,779 $ 6,698 $ 20,478 $ 19,170 Incentive
stock compensation expense $ 2,962 $ 2,565 $ 8,914 $ 7,193
Adjusted operating income plus depreciation/amortization plus
incentive stock compensation expense $ 37,330 $ 36,902 $ 116,360 $
112,659 Cash provided by operating activities $ 36,062 $
21,540 $ 74,575 $ 61,800 Capital expenditures $ 4,794 $
4,836 $ 14,415 $ 14,635 Total debt $ 294,943 $ 384,974
Cash and short-term investments $ 39,472 $ 44,403
Repurchase of common stock $ 4,750 $ 10,470 Backlog $
349,123 $ 351,297
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version on businesswire.com: http://www.businesswire.com/news/home/20170208005232/en/
RBC BearingsDaniel A. Bergeron,
203-267-5028dbergeron@rbcbearings.comorAlpha IR GroupMichael
Cummings, 617-461-1101investors@rbcbearings.com
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