Exhibit 99.1

 

Press release

 

RBC Bearings Incorporated Announces Fiscal 2019 First Quarter Results

 

Oxford, CT – August 2, 2018 – 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 first quarter of fiscal year 2019.

 

First Quarter Financial Highlights

 

   Fiscal 2019   Fiscal 2018   Change 
($ in millions)  GAAP   Adjusted (1)   GAAP   Adjusted (1)   GAAP   Adjusted (1) 
Net sales  $176.0   $176.0   $163.9   $163.9    7.4%   7.4%
Gross margin  $67.7   $67.7   $62.0   $62.0    9.2%   9.2%
Gross margin %   38.5%   38.5%   37.8%   37.8%          
Operating income  $36.0   $36.0   $32.0   $32.0    12.6%   12.6%
Operating income %   20.5%   20.5%   19.5%   19.5%          
Net income  $27.5   $28.1   $21.8   $22.0    25.9%   27.9%
Diluted EPS  $1.12   $1.15   $0.90   $0.91    24.4%   26.4%

 

(1) Results exclude items in reconciliation below.

 

“Our results for the first quarter of fiscal 2019 were in line with our expectations as organic net sales grew 9.4% during the period. Industrial sales led the way with a positive impact from the aerospace sector as well,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “The quarter’s strong operating performance, earnings growth, and healthy backlog have us well positioned for the remainder of fiscal 2019.”

 

First Quarter Results

 

Net sales for the first quarter of fiscal 2019 were $176.0 million, an increase of 7.4% from $163.9 million in the first quarter of fiscal 2018. Organic net sales increased 9.4% for the first quarter of 2019. Organically, net sales in the aerospace and industrial markets increased by 3.9% and 18.7%, respectively. Gross margin for the first quarter of fiscal 2019 was $67.7 million compared to $62.0 million for the same period last year. Gross margin as a percentage of net sales was 38.5% in the first quarter of fiscal 2019 compared to 37.8% for the same period last year.

 

SG&A for the first quarter of fiscal 2019 was $29.6 million, an increase of $1.8 million from $27.8 million for the same period last year. The increase was primarily due to higher personnel related expenses of $1.2 million, $0.5 million of additional incentive stock compensation and other items of $0.1 million. As a percentage of net sales, SG&A was 16.8% for the first quarter of fiscal 2019 compared to 16.9% for the same period last year.

 

 

 

Other operating expenses for the first quarter of fiscal 2019 totaled $2.2 million compared to $2.3 million for the same period last year. For the first quarter of fiscal 2019, other operating expenses were comprised primarily of $2.4 million of amortization of intangible assets offset by $0.2 million of other items. Other operating expenses last year consisted of $2.4 million in amortization of intangible assets offset by $0.1 million of other items.

 

Operating income for the first quarter of fiscal 2019 was $36.0 million compared to operating income of $32.0 million for the same period last year. As a percentage of net sales, operating income was 20.5% for the first quarter of fiscal 2019 compared to 19.5% for the same period last year.

 

Interest expense, net was $1.7 million for the first quarter of fiscal 2019 compared to $2.0 million for the same period last year.

 

Other non-operating expenses were $1.0 million for the first quarter fiscal 2019 compared to $0.5 million for the same period last year. For the first quarter of fiscal 2019, other non-operating expenses were comprised primarily of $1.0 million in loss on early extinguishment of debt. Other non-operating expenses for the same period last year consisted of $0.3 million of foreign exchange translation loss and $0.2 million of other items.

 

Income tax expense for the first quarter of fiscal 2019 was $5.8 million compared to $7.6 million for the same period last year. Our effective income tax rate for the first quarter of fiscal 2019 was 17.4% compared to 25.8% for the same period last year. The income tax expense includes approximately $1.3 million of benefit from incentive stock compensation compared to $2.3 million for the same period last year.

 

Net income for the first quarter of fiscal 2019 was $27.5 million compared to $21.8 million for the same period last year. On an adjusted basis, net income would have been $28.1 million for the first quarter of fiscal 2019, compared to an adjusted net income of $22.0 million for the same period last year.

 

Diluted EPS for the first quarter of fiscal 2019 was $1.12 per share compared to $0.90 per share for the same period last year. On an adjusted basis, diluted EPS for the first quarter of fiscal 2019 would have been $1.15 per share compared to an adjusted diluted EPS of $0.91 per share for the same period last year, an increase of 26.4%.

 

Backlog, as of June 30, 2018, was $419.2 million compared to $380.5 million as of July 1, 2017.

 

Term Loan Debt Extinguishment

On May 31, 2018, the Company paid down the remaining term loan balance of $159.3 million, resulting in a loss on extinguishment of debt of $1.0 million. The loss was recorded in other non-operating expense in the income statement. There were no new fees or any pre-payment fees related to the early pay-down of the term loan.

 

 

 

Outlook for the Second Quarter of Fiscal 2019

The Company expects net sales to be approximately $171.0 million to $174.0 million in the second quarter of fiscal 2019. This would result in a growth rate of approximately 4.1% to 5.9% on a year-over-year basis and organic growth rate of approximately 6.1% to 7.9% 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 # 7287895. An audio replay of the call will be available from 2:00 p.m. ET August 2nd, 2018 until 2:00 p.m. ET August 9th, 2018. The replay can be accessed by dialing 855-859-2056 (international callers dial 404-537-3406) and providing conference call ID # 7287895. 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, increased import duties, 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, including the impact of the TCJA, 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 
   June 30, 2018   July 1, 2017 
         
Net sales  $175,985   $163,897 
Cost of sales   108,246    101,881 
Gross margin   67,739    62,016 
           
Operating expenses:          
Selling, general and administrative   29,575    27,778 
Other, net   2,166    2,279 
Total operating expenses   31,741    30,057 
           
Operating income   35,998    31,959 
           
Interest expense, net   1,711    2,029 
Other non-operating (income) expense   1,034    531 
Income before income taxes   33,253    29,399 
Provision for income taxes   5,786    7,590 
Net income  $27,467   $21,809 
           
Net income per common share:          
Basic  $1.14   $0.92 
Diluted  $1.12   $0.90 
           
Weighted average common shares:          
Basic   24,140,778    23,805,138 
Diluted   24,543,589    24,189,375 

 

Reconciliation of Reported Net Income and Net Income  Three Months Ended 
Per Common Share to Adjusted Net Income and Adjusted Net Income Per Common Share:  June 30, 2018   July 1, 2017 
         
Reported net income  $27,467   $21,809 
Loss on extinguishment of long term debt (1)   815     
Foreign exchange translation loss (gain) (1)   (100)   208 
Discrete tax reserve loss (benefit)   (73)   (48)
Adjusted net income  $28,109   $21,969 
(1) After tax impact.          
           
Adjusted net income per common share:          
Basic  $1.16   $0.92 
Diluted  $1.15   $0.91 
           
Weighted average common shares:          
Basic   24,140,778    23,805,138 
Diluted   24,543,589    24,189,375 

 

 

 

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

 

   Three Months Ended 
Segment Data, Net External Sales:  June 30, 2018   July 1, 2017 
         
Plain bearings segment  $78,525   $72,653 
Roller bearings segment   35,870    31,413 
Ball bearings segment   18,074    15,780 
Engineered products segment   43,516    44,051 
   $175,985   $163,897 

 

   Three Months Ended 
Selected Financial Data:  June 30, 2018   July 1, 2017 
         
Depreciation and amortization  $7,313   $7,098 
           
Incentive stock compensation expense  $3,766   $3,228 
           
Operating income plus depreciation/amortization          
plus incentive stock compensation expense  $47,077   $42,285 
           
           
Cash provided by operating activities  $33,835   $39,809 
           
Capital expenditures  $6,993   $5,659 
           
Total debt  $144,293   $237,865 
           
Cash and short-term investments  $55,656   $45,463 
           
Total debt minus cash  $88,637   $192,402 
           
Repurchase of common stock  $1,491   $2,288 
           
Backlog  $419,249   $380,450 

 

*The Company retrospectively adopted ASU No. 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” on April 1, 2018. The adoption of this ASU resulted in the reclassification of $159 of net periodic benefit cost from compensation costs ($107 included within Cost of sales and $52 within Other, net) to Other non-operating expense on the Consolidated Statement of Operations for the three-month period ended July 1, 2017.

 

 


The following information was filed by Rbc Bearings Inc (ROLL) on Thursday, August 2, 2018 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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