Exhibit 99.1

 

Press release

 

RBC Bearings Incorporated Announces Fiscal 2019 Second Quarter Results

 

Oxford, CT – November 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 second quarter of fiscal year 2019.

 

Second Quarter Highlights

 

   Fiscal 2019   Fiscal 2018   Change 
($ in millions)  GAAP   Adjusted (1)   GAAP   Adjusted (1)   GAAP   Adjusted (1) 
Net sales  $172.9   $172.9   $164.3   $164.3    5.2%   5.2%
Gross margin  $67.8   $67.8   $61.9   $61.9    9.5%   9.5%
Gross margin %   39.2%   39.2%   37.7%   37.7%          
Operating income  $35.9   $35.9   $25.4   $31.9    41.1%   12.4%
Operating income %   20.8%   20.8%   15.5%   19.4%          
Net income  $30.1   $30.2   $14.8   $20.3    103.1%   49.2%
Diluted EPS  $1.22   $1.22   $0.61   $0.83    100.0%   47.0%
 
(1) Results exclude items in reconciliation below.

  

Six Month Highlights

 

   Fiscal 2019   Fiscal 2018   Change 
($ in millions)  GAAP   Adjusted (1)   GAAP   Adjusted (1)   GAAP   Adjusted (1) 
Net sales  $348.9   $348.9   $328.2   $328.2    6.3%   6.3%
Gross margin  $135.6   $135.6   $123.9   $123.9    9.4%   9.4%
Gross margin %   38.9%   38.9%   37.8%   37.8%          
Operating income  $71.9   $71.9   $57.4   $63.9    25.2%   12.5%
Operating income %   20.6%   20.6%   17.5%   19.5%          
Net income  $57.6   $58.3   $36.6   $42.2    57.2%   38.1%
Diluted EPS  $2.34   $2.37   $1.51   $1.74    55.0%   36.2%
 
(1) Results exclude items in reconciliation below.

 

“Our results for the second quarter of fiscal 2019 were in line with our expectations as we grew organic net sales and delivered gross margin improvements across the organization, capping a solid first half of our fiscal year,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “Strong year-over-year organic sales results in the Aerospace and Industrial markets, combined with solid margin expansion and expense management, led to improved profitability in the quarter. The strong operating performance and healthy backlog have us well-positioned for the remainder of fiscal 2019.”

 

 

 

Second Quarter Results 

Net sales for the second quarter of fiscal 2019 were $172.9 million, an increase of 5.2% from $164.3 million in the second quarter of fiscal 2018. Excluding the restructured Sargent Canada operation, organic net sales increased 7.3% year over year. Net sales for the aerospace markets increased 4.4% in total and 7.5% on an organic basis. Industrial market sales grew 6.5% in total and 7.0% on an organic basis. Gross margin for the second quarter of fiscal 2019 was $67.8 million compared to $61.9 million for the same period last year. Gross margin as a percentage of net sales was 39.2% in the second quarter of fiscal 2019 compared to 37.7% for the same period last year.

 

SG&A for the second quarter of fiscal 2019 was $29.3 million, an increase of $1.7 million from $27.6 million for the same period last year. The increase was primarily due to higher personnel-related expenses of $1.0 million, $0.6 million of additional share-based compensation and other items of $0.1 million. As a percentage of net sales, SG&A was 17.0% for the second quarter of fiscal 2019 compared to 16.8% for the same period last year.

 

Other operating expenses for the second quarter of fiscal 2019 totaled $2.6 million compared to $8.9 million for the same period last year. For the second quarter of fiscal 2019, other operating expenses consisted primarily of $2.6 million in amortization of intangible assets. For the second quarter of fiscal 2018, other operating expenses were comprised mainly of $6.5 million related to restructuring of the Sargent Canada operation and $2.4 million of amortization of intangible assets.

 

Operating income for the second quarter of fiscal 2019 was $35.9 million compared to operating income of $25.4 million for the same period last year. Excluding costs associated with restructuring of the Sargent Canada operation in fiscal 2018, adjusted operating income for the second quarter of fiscal 2018 was $31.9 million. Operating income as a percentage of net sales was 20.8% for the second quarter of fiscal 2019 compared to an adjusted 19.4% for the same period last year.

 

Interest expense, net was $1.4 million for the second quarter of fiscal 2019 compared to $1.9 million for the same period last year.

 

Income tax expense for the second quarter of fiscal 2019 was $4.0 million compared to $8.5 million for the same period last year. The effective income tax rate for the second quarter of fiscal 2019 was 11.7% compared to 36.4% for the same period last year. The reduction in the effective income tax rate primarily reflects the net benefits of the Tax Cuts and Jobs Act and $3.2 million of benefit associated with share-based compensation compared to $0.4 million of share-based compensation benefit for the same period last year.

 

 

 

Net income for the second quarter of fiscal 2019 was $30.1 million compared to $14.8 million for the same period last year. On an adjusted basis, net income was $30.2 million for the second quarter of fiscal 2019, compared to $20.3 million for the same period last year.

 

Diluted EPS for the second quarter of fiscal 2019 was $1.22 per share compared to $0.61 per share for the same period last year. On an adjusted basis, diluted EPS for the second quarter of fiscal 2019 was $1.22 per share compared to an adjusted diluted EPS of $0.83 per share for the same period last year, an increase of 47.0%.

 

Backlog, as of September 29, 2018, was $429.9 million compared to $390.2 million as of September 30, 2017.

 

Outlook for the Third Quarter Fiscal 2019 

The Company expects net sales to be approximately $174.0 million to $176.0 million in the third quarter of fiscal 2019. This would result in a growth rate of 4.3% to 5.5% on a year-over-year basis and 6.9% to 8.2% on an organic 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 # 9286307. An audio replay of the call will be available from 1:30 p.m. ET November 2, 2018 until 12:30 p.m. ET November 9, 2018. The replay can be accessed by dialing 855-859-2056 (international callers dial 404-537-3406) and providing conference call ID # 9286307. 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, 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

 

 

 

RBC Bearings Incorporated

Consolidated Statements of Operations

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

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   September 29,   September 30,   September 29,   September 30, 
   2018   2017   2018   2017 
                 
Net sales  $172,916   $164,317   $348,901   $328,214 
Cost of sales   105,097    102,399    213,343    204,280 
Gross margin   67,819    61,918    135,558    123,934 
                     
Operating expenses:                    
Selling, general and administrative   29,326    27,595    58,901    55,373 
Other, net   2,609    8,886    4,775    11,165 
Total operating expenses   31,935    36,481    63,676    66,538 
                     
Operating income   35,884    25,437    71,882    57,396 
                     
Interest expense, net   1,446    1,914    3,157    3,943 
Other non-operating (income) expense   336    223    1,370    754 
Income before income taxes   34,102    23,300    67,355    52,699 
Provision for income taxes   3,991    8,477    9,777    16,067 
Net income  $30,111   $14,823   $57,578   $36,632 
                     
Net income per common share:                    
Basic  $1.24   $0.62   $2.38   $1.53 
Diluted  $1.22   $0.61   $2.34   $1.51 
                     
Weighted average common shares:                    
Basic   24,325,754    23,946,360    24,233,266    23,875,749 
Diluted   24,719,056    24,309,593    24,635,146    24,250,740 

 

 

   Three Months Ended   Six Months Ended 
Reconciliation of Reported Operating Income to  September 29,   September 30,   September 29,   September 30, 
Adjusted Operating Income:  2018   2017   2018   2017 
                 
Reported operating income  $35,884   $25,437   $71,882   $57,396 
Integration and restructuring       6,494        6,494 
Adjusted operating income  $35,884   $31,931   $71,882   $63,890 

 

Reconciliation of Reported Net Income and Net Income  Three Months Ended   Six Months Ended 
Per Common Share to Adjusted Net Income and  September 29,   September 30,   September 29,   September 30, 
Adjusted Net Income Per Common Share:  2018   2017   2018   2017 
                 
Reported net income  $30,111   $14,823   $57,578   $36,632 
Loss on extinguishment of long term debt (1)           815     
Integration and restructuring        5,577         5,577 
Foreign exchange translation loss (gain) (1)   110    (11)   10    197 
Discrete tax reserve loss (benefit)       (134)   (73)   (182)
Adjusted net income  $30,221   $20,255   $58,330   $42,224 
(1) After tax impact.                    
                     
Adjusted net income per common share:                    
Basic  $1.24   $0.85   $2.41   $1.77 
Diluted  $1.22   $0.83   $2.37   $1.74 
                     
Weighted average common shares:                    
Basic   24,325,754    23,946,360    24,233,266    23,875,749 
Diluted   24,719,056    24,309,593    24,635,146    24,250,740 

 

 

 

RBC Bearings Incorporated

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

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   September 29,   September 30,   September 29,   September 30, 
Segment Data, Net External Sales:  2018   2017   2018   2017 
                 
Plain bearings segment  $77,480   $72,392   $156,005   $145,045 
Roller bearings segment   37,000    32,317    72,870    63,730 
Ball bearings segment   18,038    16,480    36,112    32,260 
Engineered products segment   40,398    43,128    83,914    87,179 
   $172,916   $164,317   $348,901   $328,214 

 

   Three Months Ended   Six Months Ended 
   September 29,   September 30,   September 29,   September 30, 
Selected Financial Data:  2018   2017   2018   2017 
                 
Depreciation and amortization  $7,639   $7,140   $14,952   $14,238 
                     
Incentive stock compensation expense  $4,039   $3,402   $7,805   $6,630 
                     
Adjusted operating income plus depreciation/amortization plus incentive stock compensation expense  $47,562   $42,473   $94,639   $84,758 
                     
                     
Cash provided by operating activities  $24,030   $24,153   $57,865   $63,962 
                     
Capital expenditures  $10,753   $7,008   $17,746   $12,667 
                     
Total debt            $124,458   $220,228 
                     
Cash and short-term investments            $60,365   $42,885 
                     
Total debt minus cash            $64,093   $177,343 
                     
Repurchase of common stock            $3,531   $3,356 
                     
Backlog            $429,904   $390,185 

 

*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 September 30, 2017 and $318 of net periodic benefit cost from compensation costs ($214 included within Cost of Sales and $104 within Other, net) to Other non-operating expense on the Consolidated Statement of Operations for the six-month period ended September 30, 2017.

 

 


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