Exhibit 99.1

 

Press release

 

RBC Bearings Incorporated Announces Fiscal 2018 Second Quarter Results

 

Oxford, CT – November 3, 2017 – 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 2018.

 

Second Quarter Highlights

                         
  Fiscal 2018   Fiscal 2017   Change 
($ in millions)  GAAP   Adjusted (1)   GAAP   Adjusted (1)   GAAP   Adjusted (1) 
Net sales  $164.3   $164.3   $153.9   $153.9    6.7%   6.7%
Gross margin  $61.8   $61.8   $56.7   $56.7    9.0%   9.0%
Gross margin%   37.6%   37.6%   36.9%   36.9%          
Operating income  $25.3   $31.8   $29.6   $29.8    -14.5%   6.7%
Operating income%   15.4%   19.3%   19.2%   19.3%          
Net income  $14.8   $20.3   $18.2   $18.4    -18.7%   10.0%
Diluted EPS  $0.61   $0.83   $0.77   $0.78    -20.8%   6.4%

(1) Results exclude items in reconciliation below.            

 

Six Month Highlights

                         
  Fiscal 2018   Fiscal 2017   Change 
($ in millions)   GAAP   Adjusted (1)   GAAP   Adjusted (1)   GAAP   Adjusted (1) 
Net sales  $328.2   $328.2   $308.5   $308.5    6.4%   6.4%
Gross margin  $123.7   $123.7   $114.0   $114.4    8.5%   8.2%
Gross margin%   37.7%   37.7%   36.9%   37.1%          
Operating income  $57.1   $63.6   $58.8   $59.4    -2.9%   7.1%
Operating income%   17.4%   19.4%   19.1%   19.2%          
Net income  $36.6   $42.2   $36.3   $36.5    1.0%   15.7%
Diluted EPS  $1.51   $1.74   $1.53   $1.54    -1.3%   13.0%

(1) Results exclude items in reconciliation below.            

 

“Our solid second quarter operating performance was driven by strong industrial sales growth, combined with continued gross margin improvements across the organization,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “We are able to maintain our improved margin profile as a result of our cost initiatives, manufacturing process improvements, and consolidation programs. Moving forward, our backlog remains strong and we are confident in our ability to maintain the strong momentum throughout the second half of the year.”

 

 

 

 

Second Quarter Results

Net sales for the second quarter of fiscal 2018 were $164.3 million, an increase of 6.7% from $153.9 million in the second quarter of fiscal 2017. Net sales for the aerospace markets decreased 1.2% and the industrial markets increased by 22.9%. Gross margin for the second quarter of fiscal 2018 was $61.8 million compared to $56.7 million for the same period last year. Gross margin as a percentage of net sales was 37.6% in the second quarter of fiscal 2018 compared to 36.9% for the same period last year.

 

SG&A for the second quarter of fiscal 2018 was $27.6 million, an increase of $2.4 million from $25.2 million for the same period last year. As a percentage of net sales, SG&A was 16.8% for the second quarter of fiscal 2018 compared to 16.4% for the same period last year.

 

Other operating expenses for the second quarter of fiscal 2018 totaled $8.9 million compared to $2.0 million for the same period last year. For the second quarter of fiscal 2018, other operating expenses were comprised mainly of $6.5 million related to restructuring of our Canadian operation and $2.4 million of amortization of intangible assets. Other operating expenses last year consisted primarily of $2.4 million in amortization of intangibles offset by $0.4 million of other income.

 

Operating income for the second quarter of fiscal 2018 was $25.3 million compared to operating income of $29.6 million for the same period last year. Excluding costs associated with restructuring of our Canadian operation, operating income would have been $31.8 million for the second quarter of fiscal 2018 compared to an adjusted $29.8 million for the same period last year. Excluding these adjustments, operating income as a percentage of net sales would have been 19.3% compared to 19.3% for the same period last year.

 

Interest expense, net was $1.9 million for the second quarter of fiscal 2018 compared to $2.3 million for the same period last year.

 

Income tax expense for the second quarter of fiscal 2018 was $8.5 million compared to $8.9 million for the same period last year. Our effective income tax rate for the second quarter of fiscal 2018 was 36.4% compared to 32.9% for the same period last year. The effective income tax rate was impacted by discrete tax benefit of $0.9 million associated with the restructuring of our Canadian operation and other state discrete tax benefits of $0.1 million.

 

 

 

 

Net income for the second quarter of fiscal 2018 was $14.8 million compared to $18.2 million for the same period last year. On an adjusted basis, net income would have been $20.3 million for the second quarter of fiscal 2018, compared to an adjusted net income of $18.4 million for the same period last year.

 

Diluted EPS for the second quarter of fiscal 2018 was 61 cents per share compared to 77 cents per share for the same period last year. On an adjusted basis, diluted EPS for the second quarter of fiscal 2018 would have been 83 cents per share compared to an adjusted diluted EPS of 78 cents per share for the same period last year, an increase of 6.4%.

 

Backlog, as of September 30, 2017, was $390.2 million compared to $341.8 million as of October 1, 2016.

 

Restructuring of Canadian Operation

In the second quarter of fiscal 2018, the Company reached a decision to restructure its manufacturing operation in Montreal, Canada. After completing its obligations, the Company expects to close its Montreal location and consolidate certain residual assets into other locations by the end of this fiscal year. As a result, the Company recorded an after-tax charge of $5.6 million associated with the restructuring in the second quarter of fiscal 2018 attributable to the Engineered Products segment. The $5.6 million charge includes $1.3 million impairment of fixed assets and $5.2 million impairment of intangible assets offset by $0.9 million tax benefit. The total expected impact of this restructuring will be between $7.0 million and $7.5 million in after-tax charges. The Company expects a positive cash flow result of approximately $4.4 million from this action.

 

Outlook for the Third Quarter Fiscal 2018

The Company expects net sales to be approximately $162.0 million to $163.0 million in the third quarter fiscal 2018. This would result in a growth rate of approximately 10.5% to 11.1% on a year over year basis.

 

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 # 9098489. An audio replay of the call will be available from 2:00 p.m. ET November 3rd, 2017 until 1:00 p.m. ET November 10th, 2017. The replay can be accessed by dialing 855-859-2056 (international callers dial 404-537-3406) and providing conference call ID # 9098489. 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 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 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 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, 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

Daniel A. Bergeron

203-267-5028

dbergeron@rbcbearings.com

 

Alpha IR Group

Michael Cummings

617-461-1101

investors@rbcbearings.com

 

 

 

 

RBC Bearings Incorporated

Consolidated Statements of Operations

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

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   September 30,   October 1,   September 30,   October 1, 
   2017   2016   2017   2016 
                 
Net sales  $164,317   $153,943   $328,214   $308,522 
Cost of sales   102,506    97,212    204,494    194,540 
Gross margin   61,811    56,731    123,720    113,982 
                     
Operating expenses:                    
Selling, general and administrative   27,595    25,188    55,373    50,984 
Other, net   8,938    1,989    11,269    4,223 
Total operating expenses   36,533    27,177    66,642    55,207 
                     
Operating income   25,278    29,554    57,078    58,775 
                     
Interest expense, net   1,914    2,255    3,943    4,548 
Other non-operating (income) expense   64    149    436    267 
Income before income taxes   23,300    27,150    52,699    53,960 
Provision for income taxes   8,477    8,922    16,067    17,692 
Net income  $14,823   $18,228   $36,632   $36,268 
                     
Net income per common share:                    
Basic  $0.62   $0.78   $1.53   $1.55 
Diluted  $0.61   $0.77   $1.51   $1.53 
                     
Weighted average common shares:                    
Basic   23,946,360    23,470,650    23,875,749    23,395,614 
Diluted   24,309,593    23,712,717    24,250,740    23,670,000 

 

   Three Months Ended   Six Months Ended 
Reconciliation of Reported Gross Margin to  September 30,   October 1,   September 30,   October 1, 
Adjusted Gross Margin:  2017   2016   2017   2016 
                 
Reported gross margin  $61,811   $56,731   $123,720   $113,982 
 Inventory purchase accounting adjustment               382 
Adjusted gross margin  $61,811   $56,731   $123,720   $114,364 

 

   Three Months Ended   Six Months Ended 
Reconciliation of Reported Operating Income to  September 30,   October 1,   September 30,   October 1, 
Adjusted Operating Income:  2017   2016   2017   2016 
                 
Reported operating income  $25,278   $29,554   $57,078   $58,775 
 Inventory purchase accounting adjustment               382 
 Restructuring   6,494    222    6,494    222 
Adjusted operating income  $31,772   $29,776   $63,572   $59,379 

 

 

 

 

RBC Bearings Incorporated

Consolidated Statements of Operations

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

(Unaudited)

 

Reconciliation of Reported Net Income and Net Income  Three Months Ended   Six Months Ended 
 Per Common Share to Adjusted Net Income and  September 30,   October 1,   September 30,   October 1, 
Adjusted Net Income Per Common Share:  2017   2016   2017   2016 
                 
Reported net income  $14,823   $18,228   $36,632   $36,268 
 Inventory purchase accounting adjustment (1)               257 
 Restructuring (1)   5,577    149    5,577    149 
 Foreign exchange translation loss (gain) (1)   (11)       197     
 Discrete tax loss (benefit)   (134)  33    (182)   (182)
Adjusted net income  $20,255   $18,410   $42,224   $36,492 
(1) After tax impact.                    
                     
Adjusted net income per common share:                    
Basic  $0.85   $0.78   $1.77   $1.56 
Diluted  $0.83   $0.78   $1.74   $1.54 
                     
Weighted average common shares:                    
Basic   23,946,360    23,470,650    23,875,749    23,395,614 
Diluted   24,309,593    23,712,717    24,250,740    23,670,000 

 

   Three Months Ended   Six Months Ended 
   September 30,   October 1,   September 30,   October 1, 
Segment Data, Net External Sales:  2017   2016   2017   2016 
                 
Plain bearings segment  $72,392   $68,835   $145,045   $139,285 
Roller bearings segment   32,317    26,795    63,730    54,629 
Ball bearings segment   16,480    14,569    32,260    28,279 
Engineered products segment   43,128    43,744    87,179    86,329 
   $164,317   $153,943   $328,214   $308,522 

 

   Three Months Ended   Six Months Ended 
   September 30,   October 1,   September 30,   October 1, 
Selected Financial Data:  2017   2016   2017   2016 
                 
Depreciation and amortization  $7,140   $6,959   $14,238   $13,699 
                     
Incentive stock compensation expense  $3,402   $3,178   $6,630   $5,952 
                     
Adjusted operating income plus depreciation/amortization plus incentive stock compensation expense  $42,314   $39,913   $84,440   $79,030 
                     
Cash provided by operating activities  $24,153   $19,301   $63,962   $38,513 
                     
Capital expenditures  $7,008   $4,455   $12,667   $9,621 
                     
Total debt            $220,228   $330,059 
                     
Cash and short-term investments            $42,885   $37,462 
                     
Repurchase of common stock            $3,356   $3,530 
                     
Backlog            $390,185   $341,812 

 

 


The following information was filed by Rbc Bearings Inc (ROLL) on Friday, November 3, 2017 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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