UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of report: February 10, 2011 (Date of earliest event reported:  February 10, 2011)
 
RBC BEARINGS INCORPORATED
 (Exact name of registrant as specified in its charter)
 
Delaware
333-124824
95-4372080
(State or other jurisdiction
 of incorporation)
(Commission
 File Number)
(IRS Employer
 Identification No.)
 
One Tribology Center
 Oxford, CT 06478
 (Address of principal executive offices) (Zip Code)
 
(203) 267-7001
 (Registrant’s telephone number, including area code)
 
N/A
 (Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 
 
Section 2 - Financial Information 

Item 2.02.  Results of Operations and Financial Condition.

On February 10, 2011, RBC Bearings Incorporated (the “Company”) issued a press release announcing its financial results for the quarter ended January 1, 2011 and certain other information.  This press release has been furnished as Exhibit 99.1 to this report and is incorporated herein by this reference.

The information in this report, including the exhibit hereto, is furnished pursuant to Item 2.02 of Form 8-K, and is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. The information contained herein and in the accompanying exhibit is not incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

Item 9.01 Financial Statements and Exhibits.

     (d) Exhibits
                Exhibit 99.1    Press Release of RBC Bearings Incorporated dated February 10, 2011.

SIGNATURES
According to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Date: February 10, 2011
 
 
RBC BEARINGS INCORPORATED
     
 
By:
 /s/ Thomas J. Williams
   
Name:  Thomas J. Williams
   
Title: Corporate General Counsel & Secretary
 
 
 

 
 
Press release
 
RBC Bearings Incorporated Announces Fiscal 2011 Third Quarter Results
 
Oxford, CT – February 10, 2011 – RBC Bearings Incorporated (Nasdaq: ROLL), a leading international manufacturer of highly-engineered precision plain, roller and ball bearings for the industrial, defense and aerospace industries, today reported results for the third quarter ended January 1, 2011.
 
Third Quarter Highlights

   
Q3 Fiscal 2011
   
Q3 Fiscal 2010
   
Change
 
($ in millions)
 
GAAP
   
Adjusted (1)
   
GAAP
   
Adjusted (1)
   
GAAP
   
Adjusted (1)
 
Net sales
  $ 81.3           $ 67.5             20.4 %      
Gross margin
  $ 26.0     $ 26.6     $ 20.4     $ 21.1       27.0 %     26.2 %
Gross margin %
    32.0 %     32.7 %     30.3 %     31.2 %                
Operating income
  $ 12.2     $ 12.9     $ 8.1     $ 8.9       49.9 %     45.0 %
Net income
  $ 7.4     $ 8.1     $ 5.2     $ 5.6       40.7 %     43.8 %
Diluted EPS
  $ 0.33     $ 0.37     $ 0.24     $ 0.26       37.5 %     42.3 %
(1) Results exclude items in reconciliation below.
 
Nine Month Highlights

   
Q3 Fiscal 2011
   
Q3 Fiscal 2010
   
Change
 
($ in millions)
 
GAAP
   
Adjusted (1)
   
GAAP
   
Adjusted (1)
   
GAAP
   
Adjusted (1)
 
Net sales
  $ 246.7           $ 194.9             26.6 %      
Gross margin
  $ 79.5     $ 81.6     $ 59.4     $ 61.4       33.7 %     32.8 %
Gross margin %
    32.2 %     33.1 %     30.5 %     31.5 %                
Operating income
  $ 40.1     $ 41.4     $ 23.2     $ 25.9       73.3 %     60.0 %
Net income
  $ 25.0     $ 26.6     $ 14.7     $ 16.2       69.8 %     63.9 %
Diluted EPS
  $ 1.14     $ 1.21     $ 0.68     $ 0.75       67.6 %     61.3 %
(1) Results exclude items in reconciliation below.
 
“We are pleased to report continued strong demand across our end markets in the third quarter of 2011,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “Sales to the industrial markets remain robust and we are encouraged to see our aerospace and defense markets return to growth in the quarter.  We delivered 150 basis points of improvement to adjusted gross margins and 270 basis points of improvement to adjusted operating margins on a year over year basis and remain optimistic in the strength of our end markets.”

 
 

 
 
Third Quarter Results
Net sales for the third quarter of fiscal 2011 were $81.3 million, an increase of 20.4% from $67.5 million in the third quarter of fiscal 2010. The increase of 20.4% was driven by an increase of 44.0% in our industrial business and 2.6% in net sales in our aerospace and defense business.  Gross margin for the third quarter was $26.0 million compared to $20.4 million for the same period last year. Gross margin as a percentage of net sales was 32.0% in the third quarter of fiscal 2011 compared to 30.3% for the same period last year. The increase in gross margin percentage was mainly driven by the current recovery in our industrial business offset by costs associated with our expansion into large bearing products.  Gross margin as a percentage of net sales, excluding $0.6 million of large bearing expansion costs, was 32.7% compared to 31.2% for the same adjusted period last year.
 
Operating income increased 49.9% to $12.2 million for the third quarter of fiscal 2011 compared to $8.1 million for the same period last year. As a percentage of net sales, operating income was 15.0% compared to 12.1% for the same period last year. Operating income excluding costs associated with the expansion into large bearing products and restructuring and moving costs was $12.9 million, an increase of 45.0% compared to adjusted operating income for the same period last year.  As a percentage of net sales, operating income, excluding these charges, was 15.9% compared to 13.2% for the same adjusted period last year.
 
Interest expense, net for the third quarter of fiscal 2011 was $0.4 million compared to $0.4 million for the same period last year.
 
Other non-operating expense was $0.5 million for the third quarter of fiscal 2011.  This was mainly comprised of foreign exchange losses of $0.7 million offset by a $0.2 million payment under the CDSOA.
 
For the third quarter of fiscal 2011, the Company reported net income of $7.4 million compared to net income of $5.2 million in the same period last year.  Excluding the after-tax costs associated with the expansion into large bearing products, restructuring and moving costs, the foreign exchange loss offset by the CDSOA payment, net income increased 43.8% to $8.1 million compared to $5.6 million for the same adjusted period last year.

Nine Month Results
Net sales for the nine month period ended January 1, 2011 were $246.7 million, an increase of 26.6% from $194.9 million for the nine month period ended December 26, 2009. Gross margin for the nine month period ended January 1, 2011 was $79.5 million compared to $59.4 million for the same period last year. Gross margin as a percentage of net sales was 32.2% for the nine month period of fiscal 2011 compared to 30.5% for the same period last year. The increase in gross margin percentage was mainly driven by the current recovery in our industrial business offset by costs associated with the expansion into large bearing products. Gross margin as a percentage of net sales, excluding $2.1 million of large bearing expansion costs, was 33.1% compared to 31.5% for the same adjusted period last year.

 
 

 

For the nine month period ended January 1, 2011, the Company reported operating income of $40.1 million compared to $23.2 million for the same period last year.  Operating income excluding costs associated with the expansion into large bearing products and restructuring and moving costs offset by a net gain on sale of assets was $41.4 million for the nine month period ended January 1, 2011 compared to $25.9 million for the same adjusted period last year.  Operating income as a percentage of net sales excluding these charges was 16.8% for the nine month period ended January 1, 2011 compared to 13.3% for the same adjusted period last year.

Interest expense, net for the nine month period ended January 1, 2011 was $1.2 million, a decrease of $0.1 million, from $1.3 million for the same period last year.

Other non-operating expense was a loss of $1.3 million for the nine month period ended January 1, 2011.  This was mainly comprised of foreign exchange losses.
 
Net income for the nine month period ended January 1, 2011 was $25.0 million compared to net income of $14.7 million for the same period last year.  Excluding the after-tax costs associated with the expansion into large bearing products, restructuring and moving costs and the foreign exchange loss offset by a net gain on sale of assets and the CDSOA payment, net income was $26.6 million compared to $16.2 million for the same adjusted period last year.

CDSOA Payment
In December 2010, the Company received approximately $0.2 million in payments under the U.S. Continued Dumping and Subsidy Offset Act “CDSOA” compared to $0.2 million received in December 2009.  The CDSOA distributes antidumping duties paid by overseas companies to qualified domestic firms hurt by unfair trade.  This payment has been classified below Operating income in “Other non-operating expense” on the Consolidated Statement of Operations.
 
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 800-260-8140 (international callers dial 617-614-3672) and enter conference ID # 34252268.  An audio replay of the call will be available from 2:00 p.m. ET on Thursday, February 10th until 11:59 p.m. ET on Thursday, February 17th. The replay can be accessed by dialing 888-286-8010 (international callers dial 617-801-6888) and entering conference call ID #89183562.  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 charges.  These non-GAAP measures adjust for charges 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 requiring sophisticated design, testing, and manufacturing capabilities for the diversified industrial, aerospace and defense markets.  Headquartered in Oxford, Connecticut, RBC Bearings currently employs approximately 1,920 people and operates 23 manufacturing facilities in four countries.
 
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 Annual Report filed on Form 10-K.  The Company does not intend, and undertakes no obligation, to update or alter any forward-looking statement.

 
 

 
 
Contacts

RBC Bearings
Daniel A. Bergeron
203-267-5028
dbergeron@rbcbearings.com

FD
Michael Cummings
617-897-1542
investors@rbcbearings.com

 
 

 
 
RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)

   
Three Months Ended
   
Nine Months Ended
 
   
January 1,
   
December 26,
   
January 1,
   
December 26,
 
   
2011
   
2009
   
2011
   
2009
 
                         
Net sales
  $ 81,258     $ 67,481     $ 246,727     $ 194,870  
Cost of sales
    55,294       47,042       167,272       135,434  
Gross margin
    25,964       20,439       79,455       59,436  
                                 
Operating expenses:
                               
Selling, general and administrative
    13,328       11,936       38,808       34,687  
Other, net
    432       364       508       1,594  
Total operating expenses
    13,760       12,300       39,316       36,281  
                                 
Operating income
    12,204       8,139       40,139       23,155  
                                 
Interest expense, net
    375       394       1,165       1,323  
Other non-operating expense (income)
    456       (202 )     1,273       (442 )
Income before income taxes
    11,373       7,947       37,701       22,274  
Provision for income taxes
    3,987       2,698       12,700       7,554  
Net income
  $ 7,386     $ 5,249     $ 25,001     $ 14,720  
                                 
Net income per common share:
                               
Basic
  $ 0.34     $ 0.24     $ 1.16     $ 0.68  
Diluted
  $ 0.33     $ 0.24     $ 1.14     $ 0.68  
                                 
Weighted average common shares:
                               
Basic
    21,690,144       21,596,344       21,641,997       21,590,362  
Diluted
    22,113,754       21,768,570       22,027,525       21,735,512  
 
 
 

 
 
RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)
 
Reconciliation of Reported Gross Margin to Adjusted Gross Margin:
 
   
Three Months Ended
   
Nine Months Ended
 
   
January 1,
   
December 26,
   
January 1,
   
December 26,
 
   
2011
   
2009
   
2011
   
2009
 
                         
Reported gross margin
  $ 25,964     $ 20,439     $ 79,455     $ 59,436  
Large bearing expansion costs
    628       637       2,138       2,011  
Adjusted gross margin
  $ 26,592     $ 21,076     $ 81,593     $ 61,447  
 
Reconciliation of Reported Operating Income to Adjusted Operating Income:
 
   
Three Months Ended
   
Nine Months Ended
 
   
January 1,
   
December 26,
   
January 1,
   
December 26,
 
   
2011
   
2009
   
2011
   
2009
 
                         
Reported operating income
  $ 12,204     $ 8,139     $ 40,139     $ 23,155  
Large bearing expansion costs
    628       637       2,138       2,011  
Restructuring and moving costs
    64       110       184       672  
(Gain) loss on disposition or sale of assets
    -       10       (1,066 )     29  
Adjusted operating income
  $ 12,896     $ 8,896     $ 41,395     $ 25,867  
 
Reconciliation of Reported Net Income and Net Income Per Common Share to Adjusted Net Income and Adjusted Net Income Per Common Share:
 
   
Three Months Ended
   
Nine Months Ended
 
   
January 1,
   
December 26,
   
January 1,
   
December 26,
 
   
2011
   
2009
   
2011
   
2009
 
                         
Reported net income
  $ 7,386     $ 5,249     $ 25,001     $ 14,720  
Large bearing expansion costs (1)
    408       421       1,418       1,329  
Restructuring and moving costs (1)
    42       73       122       444  
(Gain) loss on disposition or sale of assets (1)
    -       7       (707 )     19  
CDSOA payment (1)
    (107 )     (123 )     (109 )     (123 )
Foreign exchange loss (gain) (1)
    349       (10 )     865       (169 )
Adjusted net income
  $ 8,078     $ 5,617     $ 26,590     $ 16,220  
(1) Item was tax effected at the effective tax rate.
                               
                                 
Adjusted net income per common share:
                               
Basic
  $ 0.37     $ 0.26     $ 1.23     $ 0.75  
Diluted
  $ 0.37     $ 0.26     $ 1.21     $ 0.75  
                                 
Adjusted weighted average common shares:
                               
Basic
    21,690,144       21,596,344       21,641,997       21,590,362  
Diluted
    22,113,754       21,768,570       22,027,525       21,735,512  
 
 
 

 
 
RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)
 
Segment Data, Net External Sales:
  
   
Three Months Ended
   
Nine Months Ended
 
   
January 1,
   
December 26,
   
January 1,
   
December 26,
 
   
2011
   
2009
   
2011
   
2009
 
                         
Roller bearings segment
  $ 24,988     $ 18,955     $ 73,280     $ 51,834  
Plain bearings segment
    39,919       32,717       123,515       93,979  
Ball bearings segment
    9,561       10,112       30,537       33,724  
Other segment
    6,790       5,697       19,395       15,333  
    $ 81,258     $ 67,481     $ 246,727     $ 194,870  
 
Selected Financial Data:
 
   
Three Months Ended
   
Nine Months Ended
 
   
January 1,
   
December 26,
   
January 1,
   
December 26,
 
   
2011
   
2009
   
2011
   
2009
 
                         
Depreciation and amortization
  $ 3,284     $ 3,088     $ 9,767     $ 8,955  
                                 
Incentive stock compensation expense
  $ 1,017     $ 825     $ 3,040     $ 2,278  
                                 
Cash provided by operating activities
  $ 14,723     $ 13,594     $ 40,375     $ 34,973  
                                 
Capital expenditures
  $ 2,666     $ 1,487     $ 7,252     $ 7,508  
                                 
Total debt
                  $ 31,367     $ 53,702  
                                 
Cash and short-term investments
                  $ 60,775     $ 40,463  
                                 
Backlog
                  $ 179,997     $ 155,582