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RBC Bearings Incorporated Announces Fiscal 2021 Third Quarter Results

OXFORD, Conn.--(BUSINESS WIRE)--Jan. 29, 2021-- 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

 

 

 

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