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RBC Bearings Incorporated Announces Fiscal 2021 Second Quarter Results

OXFORD, Conn.--(BUSINESS WIRE)--Oct. 30, 2020-- 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 2021.

Second Quarter Financial Highlights

($ in millions)

Fiscal 2021

 

Fiscal 2020

 

Change

GAAP

Adjusted (1)

GAAP

Adjusted (1)

GAAP

Adjusted (1)

Net sales

$146.3

 

$181.9

 

-19.6%

 

Gross margin

$56.6

$58.6

$71.1

$71.2

-20.4%

-17.7%

Gross margin %

38.7%

40.0%

39.1%

39.1%

 

 

Operating income

$26.4

$29.9

$37.3

$38.4

-29.3%

-22.2%

Operating income %

18.0%

20.4%

20.5%

21.1%

 

 

Net income

$20.4

$23.2

$31.3

$32.3

-34.7%

-28.2%

Diluted EPS

$0.82

$0.93

$1.26

$1.30

-34.9%

-28.5%

(1) Results exclude items in reconciliation below.

Six Month Financial Highlights

($ in millions)

Fiscal 2021

 

Fiscal 2020

 

Change

GAAP

 

Adjusted (1)

GAAP

 

Adjusted (1)

GAAP

 

Adjusted (1)

Net sales

$302.8

 

$364.6

 

-16.9%

 

Gross margin

$116.0

$118.0

$141.8

$141.9

-18.2%

-16.8%

Gross margin %

38.3%

39.0%

38.9%

38.9%

 

 

Operating income

$55.2

$59.8

$75.8

$76.9

-27.2%

-22.2%

Operating income %

18.2%

19.8%

20.8%

21.1%

 

 

Net income

$43.1

$46.8

$61.8

$62.9

-30.2%

-25.5%

Diluted EPS

$1.73

$1.88

$2.49

$2.53

-30.5%

-25.7%

(1) Results exclude items in reconciliation below.

“Our second quarter results showed strong profitability from our core products” said Michael J. Hartnett, Chairman and Chief Executive Officer. “Looking to the back half of the fiscal year, we remain committed to the preservation of our healthy balance sheet and taking great advantage of our resources to develop new products to address the emerging and urgent needs presented by both space and defense markets.”

Second Quarter Results

Net sales for the second quarter of fiscal 2021 were $146.3 million, a decrease of 19.6% from $181.9 million in the second quarter of fiscal 2020, and organic net sales decreased 19.8% year over year. Net sales for the aerospace markets decreased 25.8% while industrial market net sales declined 8.3% or 8.9% on an organic basis. Gross margin for the second quarter of fiscal 2021 was $56.6 million compared to $71.1 million for the same period last year. On an adjusted basis, gross margin for the second quarter of fiscal 2021 was $58.6 million compared to an adjusted $71.2 million for the same quarter last year.

SG&A for the second quarter of fiscal 2021 was $26.0 million, a decrease of $4.8 million from $30.8 million for the same period last year. The decrease was primarily due to lower personnel-related costs of $4.9 million offset by $0.1 million of other items. As a percentage of net sales, SG&A was 17.8% for the second quarter of fiscal 2021 compared to 16.9% for the same period last year.

Other operating expenses for the second quarter of fiscal 2021 totaled $4.2 million compared to $3.0 million for the same period last year. For the second quarter of fiscal 2021, other operating expenses consisted primarily of $1.5 million of restructuring costs and related items, $2.6 million of amortization of intangible assets and $0.1 million of other items. For the second quarter of fiscal 2020, other operating expenses were comprised mainly of $2.3 million in amortization of intangible assets and $0.9 million of acquisition costs partially offset by $0.2 million of other income.

Operating income for the second quarter of fiscal 2021 was $26.4 million compared to $37.3 million for the same period last year. Excluding other restructuring charges and related items of $3.5 million, adjusted operating income for the second quarter of fiscal 2021 was $29.9 million compared to adjusted operating income of $38.4 million for the second quarter of fiscal 2020. Adjusted operating income as a percentage of net sales was 20.4% for the second quarter of fiscal 2021 compared to 21.1% for the same period last year.

Interest expense, net was $0.3 million for the second quarter of fiscal 2021 compared to $0.5 million for the same period last year.

Income tax expense for the second quarter of fiscal 2021 was $5.4 million compared to $5.4 million for the same period last year. The effective income tax rate for the second quarter of fiscal 2021 was 20.9% compared to 14.7% for the same period last year. The current quarter income tax expense included $0.4 million of tax benefits from share-based stock compensation compared to $2.5 million for the same period last year.

Net income for the second quarter of fiscal 2021 was $20.4 million compared to $31.3 million for the same period last year. On an adjusted basis, net income was $23.2 million for the second quarter of fiscal 2021 compared to $32.3 million for the same period last year.

Diluted EPS for the second quarter of fiscal 2021 was $0.82 per share compared to $1.26 per share for the same period last year. On an adjusted basis, diluted EPS was $0.93 per share for the second quarter of fiscal 2021 compared to $1.30 per share for the same period last year.

Backlog as of September 26, 2020 was $403.0 million compared to $473.2 million as of September 28, 2019.

Restructuring and Consolidation

During the second quarter of fiscal 2021 the company consolidated two of its manufacturing facilities. This resulted in $2.6 million of non-cash restructuring charges comprised of $2.0 million of inventory rationalization charges within cost of sales and $0.6 million of other charges within other operating expenses. Other restructuring charges during the quarter included personnel-related costs of $0.5 million and $0.4 million of other non-cash items.

Liquidity

The Company ended the second quarter of fiscal 2021 with a strong cash balance and liquidity position. Cash as of September 26, 2020 was $166.4 million and the Company had approximately $259.5 million of undrawn revolving credit on its two bank facilities. The Company ended the quarter with total debt of $20.4 million and was in full compliance with all covenants under its credit agreements.

Outlook for the Third Quarter Fiscal 2021

The Company expects net sales to be approximately $140.0 million to $145.0 million in the third quarter of fiscal 2021, compared to $177.0 million last year.

Live Webcast

RBC Bearings Incorporated will host a webcast on Friday, October 30th 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 # 7558975. An audio replay of the call will be available from 1:45 p.m. ET October 30, 2020 until 1:45 p.m. ET November 6, 2020. The replay can be accessed by dialing 855-859-2056 (international callers dial 404-537-3406) and providing conference call ID # 7558975. 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

 

Six Months Ended

September 26,

 

September 28,

 

September 26,

 

September 28,

2020

 

2019

 

2020

 

2019

Net sales

$

146,335

 

$

181,909

$

302,828

 

$

364,599

 

Cost of sales

 

89,739

 

 

110,795

 

186,779

 

 

222,791

 

Gross margin

 

56,596

 

 

71,114

 

116,049

 

 

141,808

 

 
Operating expenses:
Selling, general and administrative

 

26,023

 

 

30,774

 

52,852

 

 

60,861

 

Other, net

 

4,210

 

 

3,031

 

8,020

 

 

5,148

 

Total operating expenses

 

30,233

 

 

33,805

 

60,872

 

 

66,009

 

 
Operating income

 

26,363

 

 

37,309

 

55,177

 

 

75,799

 

 
Interest expense, net

 

343

 

 

473

 

768

 

 

1,020

 

Other non-operating expense (income)

 

211

 

 

195

 

253

 

 

364

 

Income before income taxes

 

25,809

 

 

36,641

 

54,156

 

 

74,415

 

Provision for income taxes

 

5,388

 

 

5,371

 

11,046

 

 

12,646

 

Net income

$

20,421

 

$

31,270

$

43,110

 

$

61,769

 

 
Net income per common share:
Basic

$

0.82

 

$

1.27

$

1.74

 

$

2.52

 

Diluted

$

0.82

 

$

1.26

$

1.73

 

$

2.49

 

 
Weighted average common shares:
Basic

 

24,823,658

 

 

24,584,369

 

24,793,245

 

 

24,543,038

 

Diluted

 

24,957,158

 

 

24,905,173

 

24,944,608

 

 

24,856,561

 

 

Three Months Ended

 

Six Months Ended

Reconciliation of Reported Gross Margin to

September 26,

 

September 28,

 

September 26,

 

September 28,

Adjusted Gross Margin:

2020

 

2019

 

2020

 

2019

Reported gross margin

$

56,596

 

$

71,114

$

116,049

 

$

141,808

 

Inventory purchase accounting adjustment

 

-

 

 

84

 

-

 

 

84

 

Restructuring and consolidation

 

1,994

 

 

-

 

1,994

 

 

-

 

Adjusted gross margin

$

58,590

 

$

71,198

$

118,043

 

$

141,892

 

 

Three Months Ended

 

Six Months Ended

Reconciliation of Reported Operating Income to

September 26,

 

September 28,

 

September 26,

 

September 28,

Adjusted Operating Income:

2020

 

2019

 

2020

 

2019

Reported operating income

$

26,363

 

$

37,309

$

55,177

 

$

75,799

 

Inventory purchase accounting adjustment

 

-

 

 

84

 

-

 

 

84

 

Acquisition costs

 

-

 

 

901

 

-

 

 

901

 

Restructuring and consolidation

 

3,514

 

 

84

 

4,633

 

 

84

 

Adjusted operating income

$

29,877

 

$

38,378

$

59,810

 

$

76,868

 

 
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 28,

 

September 26,

 

September 28,

Adjusted Net Income Per Common Share:

2020

 

2019

 

2020

 

2019

Reported net income

$

20,421

 

$

31,270

$

43,110

 

$

61,769

 

Inventory purchase accounting adjustment (1)

 

-

 

 

72

 

-

 

 

72

 

Acquisition costs (1)

 

-

 

 

769

 

-

 

 

769

 

Restructuring and consolidation (1)

 

2,780

 

 

72

 

3,676

 

 

72

 

Foreign exchange translation loss (1)

 

115

 

 

65

 

176

 

 

348

 

Discrete and other tax items benefit

 

(102

)

 

82

 

(127

)

 

(151

)

Adjusted net income

$

23,214

 

$

32,330

$

46,835

 

$

62,879

 

(1) After tax impact.
 
Adjusted net income per common share:
Basic

$

0.94

 

$

1.32

$

1.89

 

$

2.56

 

Diluted

$

0.93

 

$

1.30

$

1.88

 

$

2.53

 

 
Weighted average common shares:
Basic

 

24,823,658

 

 

24,584,369

 

24,793,245

 

 

24,543,038

 

Diluted

 

24,957,158

 

 

24,905,173

 

24,944,608

 

 

24,856,561

 

 

Three Months Ended

 

Six Months Ended

September 26,

 

September 28,

 

September 26,

 

September 28,

Segment Data, Net External Sales:

2020

 

2019

 

2020

 

2019

Plain bearings segment

$

71,053

 

$

90,007

$

149,928

 

$

177,496

 

Roller bearings segment

 

21,579

 

 

32,585

 

44,479

 

 

69,444

 

Ball bearings segment

 

21,099

 

 

17,424

 

39,939

 

 

35,134

 

Engineered products segment

 

32,604

 

 

41,893

 

68,482

 

 

82,525

 

$

146,335

 

$

181,909

$

302,828

 

$

364,599

 

 
 

Three Months Ended

 

Six Months Ended

September 26,

 

September 28,

 

September 26,

 

September 28,

Selected Financial Data:

2020

 

2019

 

2020

 

2019

Depreciation and amortization

$

8,437

 

$

7,802

$

16,833

 

$

15,322

 

 
Share-based stock compensation expense

 

5,231

 

 

5,059

 

10,669

 

 

9,861

 

 
Adjusted operating income plus depreciation/amortization
plus share-based stock compensation expense

$

43,545

 

$

51,239

$

87,312

 

$

102,051

 

 
 
Cash provided by operating activities

$

26,120

 

$

24,482

$

74,479

 

$

64,618

 

 
Capital expenditures

$

2,133

 

$

8,176

$

6,008

 

$

20,216

 

 
Total debt

$

20,392

 

$

37,777

 

 
Cash and short-term investments

$

166,352

 

$

36,398

 

 
Repurchase of common stock

$

4,399

 

$

9,848

 

 
Backlog

$

402,958

 

$

473,233

 

 
 
 
 

Three Months Ended

 

Six Months Ended

September 26,

 

September 28,

 

September 26,

 

September 28,

Reconciliation of Total Net Sales to Organic Sales:

2020

 

2019

 

2020

 

2019

Net sales

$

146,335

 

$

181,909

$

302,828

 

$

364,599

 

Swiss Tool - acquisition

 

(433

)

 

-

 

(2,619

)

 

-

 

Organic net sales

$

145,902

 

$

181,909

$

300,209

 

$

364,599

 

 
 

Three Months Ended

 

Six Months Ended

September 26,

 

September 28,

 

September 26,

 

September 28,

Reconciliation of Aerospace Net Sales to Organic Sales:

2020

 

2019

 

2020

 

2019

Net sales

$

87,141

 

$

117,384

$

186,123

 

$

233,703

 

Swiss Tool - acquisition

 

-

 

 

-

 

-

 

 

-

 

Organic net sales

$

87,141

 

$

117,384

$

186,123

 

$

233,703

 

 
 

Three Months Ended

 

Six Months Ended

September 26,

 

September 28,

 

September 26,

 

September 28,

Reconciliation of Industrial Net Sales to Organic Sales:

2020

 

2019

 

2020

 

2019

Net sales

$

59,194

 

$

64,525

$

116,705

 

$

130,896

 

Swiss Tool - acquisition

 

(433

)

 

-

 

(2,619

)

 

-

 

Organic net sales

$

58,761

 

$

64,525

$

114,086

 

$

130,896

 

 

 

RBC Bearings
Robert Sullivan
203-267-5014
Rsullivan@rbcbearings.com

Alpha IR Group
Michael Cummings
617-461-1101
investors@rbcbearings.com

Source: RBC Bearings Incorporated