Exhibit 99.1

 

Press release

 

RBC Bearings Incorporated Announces Fiscal 2020 Third Quarter Results

 

Oxford, CT – February 4, 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 third quarter of fiscal year 2020.

 

Key Highlights

-Net sales of $177.0 million up 3.2% compared to the prior year quarter and up 3.6% organically
-Adjusted fully diluted EPS of $1.22 up from $1.15 in the third quarter last year
-Backlog of $477.7 million up 11.6% year over year

 

Third Quarter Financial Highlights

 

   Fiscal 2020  Fiscal 2019  Change
($ in millions)  GAAP  Adjusted (1)  GAAP  Adjusted (1)  GAAP  Adjusted (1)
Net sales  $177.0        $171.5         3.2%     
Gross margin  $70.7   $70.9   $68.1   $68.1    3.8%   4.1%
Gross margin %   39.9%   40.1%   39.7%   39.7%          
Operating income  $37.5   $37.8   $19.8   $36.6    88.9%   3.2%
Operating income %   21.2%   21.4%   11.6%   21.4%          
Net income  $30.5   $30.4   $16.2   $28.5    88.6%   6.7%
Diluted EPS  $1.22   $1.22   $0.65   $1.15    87.7%   6.1%

 

(1) Results exclude items in reconciliation below.

 

Nine Month Financial Highlights

 

   Fiscal 2020  Fiscal 2019  Change
($ in millions)  GAAP  Adjusted (1)  GAAP  Adjusted (1)  GAAP  Adjusted (1)
Net sales  $541.6        $520.4         4.1%     
Gross margin  $212.5   $212.8   $203.7   $203.7    4.3%   4.5%
Gross margin %   39.2%   39.3%   39.1%   39.1%          
Operating income  $113.3   $114.7   $91.7   $108.5    23.5%   5.7%
Operating income %   20.9%   21.2%   17.6%   20.9%          
Net income  $92.3   $93.3   $73.8   $86.8    25.1%   7.4%
Diluted EPS  $3.71   $3.75   $2.99   $3.52    24.1%   6.5%

 

(1) Results exclude items in reconciliation below.

 

1

 

 

“Our operational performance was in line with our expectations for the third quarter. The aerospace markets continue to grow organically at double-digit levels, driven by additional manufacturing capacity and contracts now converting to revenues,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “While the industrial markets remain challenged, we have new contracts coming onto existing accounts, which will help increase industrial volumes throughout the calendar year.”

 

Third Quarter Results

 

Net sales for the third quarter of fiscal 2020 were $177.0 million, an increase of 3.2% from $171.5 million in the third quarter of fiscal 2019, and organic net sales increased 3.6% year over year. Net sales for the aerospace markets increased 9.9% in total and 13.0% on an organic basis. Industrial market sales declined 7.5%, 11.0% on an organic basis. Gross margin for the third quarter of fiscal 2020 was $70.7 million compared to $68.1 million for the same period last year. Excluding $0.2 million of inventory purchase accounting adjustments related to the acquisition of Swiss Tool, adjusted gross margin as a percentage of net sales was 40.1% in the third quarter of fiscal 2020 compared to 39.7% for the same period last year.

 

SG&A for the third quarter of fiscal 2020 was $30.7 million, an increase of $1.6 million from $29.1 million for the same period last year. The increase was primarily due to $1.2 million of additional share-based stock compensation costs and additional personnel-related costs of $0.4 million. As a percentage of net sales, SG&A was 17.4% for the third quarter of fiscal 2020 compared to 17.0% for the same period last year.

 

Other operating expenses for the third quarter of fiscal 2020 totaled $2.5 million compared to $19.1 million for the same period last year. For the third quarter of fiscal 2020, other operating expenses consisted primarily of $2.5 million of amortization of intangible assets. For the third quarter of fiscal 2019, other operating expenses were comprised mainly of $16.8 million of expenses related to the sale of the Miami division and $2.4 million in amortization of intangible assets offset by $0.1 million of other income.

 

Operating income for the third quarter of fiscal 2020 was $37.5 million compared to operating income of $19.8 million for the same period last year. Excluding $0.2 million of inventory purchase accounting adjustments related to the acquisition of Swiss Tool and other restructuring charges of $0.1 million, adjusted operating income for the third quarter of fiscal 2020 was $37.8 million. Excluding costs associated with the sale of our Miami division in the third quarter of fiscal 2019, adjusted operating income was $36.6 million. Adjusted operating income as a percentage of net sales was 21.4% for the third quarter of fiscal 2020 compared to 21.4% for the same period last year. Through the third quarter of fiscal 2020, year to date adjusted operating income as a percentage of net sales was 21.2% compared to 20.9% for the same period last year.

 

Interest expense, net was $0.5 million for the third quarter of fiscal 2020 compared to $1.2 million for the same period last year.

 

2

 

 

Income tax expense for the third quarter of fiscal 2020 was $6.3 million compared to $2.8 million for the same period last year. The effective income tax rate for the third quarter of fiscal 2020 was 17.0% compared to 15.0% for the same period last year. The current quarter income tax expense included approximately $0.9 million of benefit from share-based stock compensation and $0.6 million of discrete tax benefit due to a decrease in reserves for unrecognized tax positions pertaining primarily to the statute of limitations expiration. Income tax expense for the same period last year was impacted by $4.0 million of benefit associated with the sale of the Miami division, $1.5 million of discrete tax benefit due to a decrease in the reserves for unrecognized tax positions pertaining primarily to the statute of limitations expiration of items associated with the consolidation and restructuring of the company’s UK manufacturing facility and $0.6 million of benefit associated with share-based stock compensation offset by $0.9 million of tax withholding associated with the repatriation of cash from our foreign operations.

 

Net income for the third quarter of fiscal 2020 was $30.5 million compared to $16.2 million for the same period last year. On an adjusted basis, net income was $30.4 million for the third quarter of fiscal 2020 compared to $28.5 million for the same period last year.

 

Diluted EPS for the third quarter of fiscal 2020 was $1.22 per share compared to $0.65 per share for the same period last year. On an adjusted basis, diluted EPS for the third quarter of fiscal 2020 was $1.22 per share compared to an adjusted diluted EPS of $1.15 per share for the same period last year, an increase of 6.1%.

 

Backlog as of December 28, 2019 was $477.7 million compared to $428.2 million as of December 29, 2018.

 

Boeing 737 MAX Exposure

 

The Company supplies precision bearings and components to Boeing and Boeing’s Vendor Base for the manufacturing of the 737 Max aircraft. Our current content for both the airframe and engines is approximately one hundred twenty thousand dollars per plane and will approach one hundred sixty thousand dollars per plane as new contracts mature.

 

Outlook for the Fourth Quarter Fiscal 2020

 

The Company expects net sales to be approximately $187.0 million to $191.0 million in the fourth quarter of fiscal 2020. This would result in a growth rate of 2.7% to 4.9% on a year-over-year basis and 1.3% to 3.5% excluding $2.4 million of sales associated with Swiss Tool, which the Company acquired in the second quarter of fiscal 2020.

 

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 844-419-1755 (international callers dial 216-562-0468) and provide conference ID # 6055225. An audio replay of the call will be available from 1:45 p.m. ET February 4, 2020 until 12:45 p.m. ET February 11, 2020. The replay can be accessed by dialing 855-859-2056 (international callers dial 404-537-3406) and providing conference call ID # 6055225. Investors are advised to dial into the call at least ten minutes prior to the call to register.

 

3

 

 

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, 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.

 

Contacts

 

RBC Bearings

Ernest Hawkins

203-267-5010

Ehawkins@rbcbearings.com

 

Alpha IR Group

Michael Cummings

617-461-1101

investors@rbcbearings.com

 

4

 

 

RBC Bearings Incorporated

Consolidated Statements of Operations

(dollars in thousands, except share and per share data)

(Unaudited)

 

   Three Months Ended  Nine Months Ended
   December 28,  December 29,  December 28,  December 29,
   2019  2018  2019  2018
Net sales  $177,019   $171,453   $541,618   $520,354 
Cost of sales   106,308    103,326    329,099    316,669 
Gross margin   70,711    68,127    212,519    203,685 
                     
Operating expenses:                    
Selling, general and administrative   30,719    29,142    91,580    88,043 
Other, net   2,526    19,147    7,674    23,922 
Total operating expenses   33,245    48,289    99,254    111,965 
                     
Operating income   37,466    19,838    113,265    91,720 
                     
Interest expense, net   466    1,197    1,486    4,354 
Other non-operating expense (income)   217    (386)   581    984 
Income before income taxes   36,783    19,027    111,198    86,382 
Provision for income taxes   6,268    2,849    18,914    12,626 
Net income  $30,515   $16,178   $92,284   $73,756 
                     
Net income per common share:                    
Basic  $1.24   $0.66   $3.75   $3.03 
Diluted  $1.22   $0.65   $3.71   $2.99 
                     
Weighted average common shares:                    
Basic   24,699,461    24,457,555    24,595,179    24,308,029 
Diluted   24,981,480    24,800,647    24,898,635    24,693,015 

 

   Three Months Ended  Nine Months Ended
Reconciliation of Reported Gross Margin to  December 28,  December 29,  December 28,  December 29,
Adjusted Gross Margin:  2019  2018  2019  2018
Reported gross margin  $70,711   $68,127   $212,519   $203,685 
Inventory purchase accounting adjustment   187    -    271    - 
Adjusted gross margin  $70,898   $68,127   $212,790   $203,685 

 

   Three Months Ended  Nine Months Ended
Reconciliation of Reported Operating Income to  December 28,  December 29,  December 28,  December 29,
Adjusted Operating Income:  2019  2018  2019  2018
Reported operating income  $37,466   $19,838   $113,265   $91,720 
Net loss on sale of Miami division   -    16,802    -    16,802 
Inventory purchase accounting adjustment   187    -    271    - 
Acquisition costs   -    -    901    - 
Integration and restructuring   147    -    231    - 
Adjusted operating income  $37,800   $36,640   $114,668   $108,522 

 

5

 

 

Reconciliation of Reported Net Income and Net Income  Three Months Ended  Nine Months Ended
Per Common Share to Adjusted Net Income and  December 28,  December 29,  December 28,  December 29,
Adjusted Net Income Per Common Share:  2019  2018  2019  2018
Reported net income  $30,515   $16,178   $92,284   $73,756 
Net loss on sale of Miami division (1)   -    12,754    -    12,754 
Loss on extinguishment of long-term debt (1)   -    -    -    815 
Withholding tax associated with repatriation of cash   -    943    -    943 
Inventory purchase accounting adjustment (1)   155    -    227    - 
Acquisition costs (1)   -         769    - 
Integration and restructuring (1)   122    -    194    - 
Foreign exchange translation loss (gain) (1)   161    (58)   509    (48)
Discrete and other tax reserve loss (benefit)   (567)   (1,347)   (718)   (1,420)
Adjusted net income  $30,386   $28,470   $93,265   $86,800 
(1) After tax impact.                    
                     
Adjusted net income per common share:                    
Basic  $1.23   $1.16   $3.79   $3.57 
Diluted  $1.22   $1.15   $3.75   $3.52 
                     
Weighted average common shares:                    
Basic   24,699,461    24,457,555    24,595,179    24,308,029 
Diluted   24,981,480    24,800,647    24,898,635    24,693,015 

 

   Three Months Ended  Nine Months Ended
   December 28,  December 29,  December 28,  December 29,
Segment Data, Net External Sales:  2019  2018  2019  2018
Plain bearings segment  $86,876   $79,306   $264,372   $235,311 
Roller bearings segment   31,829    34,841    101,273    107,711 
Ball bearings segment   18,475    16,720    53,609    52,832 
Engineered products segment   39,839    40,586    122,364    124,500 
   $177,019   $171,453   $541,618   $520,354 

 

   Three Months Ended  Nine Months Ended
   December 28,  December 29,  December 28,  December 29,
Selected Financial Data:  2019  2018  2019  2018
Depreciation and amortization  $7,953   $7,310   $23,275   $22,262 
                     
Share-based stock compensation expense   5,135    3,904    14,996    11,709 
                     
Adjusted operating income plus depreciation/amortization plus share-based stock compensation expense  $50,888   $47,854   $152,939   $142,493 
                     
Cash provided by operating activities  $46,577   $21,148   $111,195   $79,013 
                     
Capital expenditures  $7,346   $11,459   $27,562   $29,205 
                     
Total debt            $22,809   $114,551 
                     
Cash and short-term investments            $60,328   $81,697 
                     
Repurchase of common stock            $11,548   $4,711 
                     
Backlog            $477,702   $428,231 

 

   Three Months Ended  Nine Months Ended
   December 28,  December 29,  December 28,  December 29,
Reconciliation of Total Net Sales to Organic Sales:  2019  2018  2019  2018
Net sales  $177,019   $171,453   $541,618   $520,354 
Miami division - divestiture   -    (2,921)   -    (11,308)
Swiss Tool - acquisition   (2,353)   -    (3,813)   - 
Organic net sales  $174,666   $168,532   $537,805   $509,046 

 

6

 

 

   Three Months Ended  Nine Months Ended
   December 28,  December 29,  December 28,  December 29,
Reconciliation of Aerospace Net Sales to Organic Sales:  2019  2018  2019  2018
Net sales  $116,146   $105,679   $349,849   $316,680 
Miami division - divestiture   -    (2,921)   -    (11,308)
Organic net sales  $116,146   $102,758   $349,849   $305,372 

 

   Three Months Ended  Nine Months Ended
   December 28,  December 29,  December 28,  December 29,
Reconciliation of Industrial Net Sales to Organic Sales:  2019  2018  2019  2018
Net sales  $60,873   $65,774   $191,769   $203,674 
Swiss Tool - acquisition   (2,353)   -    (3,813)   - 
Organic net sales  $58,520   $65,774   $187,956   $203,674 

 

 

7

 

 


The following information was filed by Rbc Bearings Inc (ROLL) on Tuesday, February 4, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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