RBC Bearings Incorporated (Nasdaq: ROLL, ROLLP), 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 2022.
Key Highlights
- Third quarter net sales of $267.0 million increased 83.0% over
last year; organic net sales up 7.6%.
- Third quarter adjusted gross margin of $100.3 million, 37.6%
compared to 38.7% for the same period last year.
- Fourth quarter outlook shows net sales of $340.0 million to
$350.0 million including three months of Dodge, a growth rate of
112.1% to 118.3%.
- Third quarter EBITDA of 15.3%; adjusted EBITDA of 26.7% vs last
year adjusted EBITDA of 28.1%.
Third Quarter Financial
Highlights
($ in millions)
Fiscal 2022
Fiscal 2021
Change
GAAP
Adjusted (1)
GAAP
Adjusted (1)
GAAP
Adjusted (1)
Net sales
$267.0
$145.9
83.0%
Gross margin
$93.3
$100.3
$55.6
$56.4
67.9%
77.8%
Gross margin %
35.0%
37.6%
38.1%
38.7%
Operating income
$14.4
$44.8
$26.5
$27.9
-45.9%
60.7%
Operating income %
5.4%
16.8%
18.2%
19.1%
Net income/(loss)
(0.1)
$26.1
$21.6
$22.7
-100.3%
15.0%
Net income/(loss) available to common
stockholders
($5.8)
$20.3
$21.6
$22.7
-127.0%
-10.3%
Diluted EPS
($0.20)
$0.70
$0.86
$0.90
-123.3%
-22.2%
Diluted Cash EPS
$1.46
$1.35
8.1%
(1) Results exclude items in
reconciliation below.
Nine Month Financial
Highlights
($ in millions)
Fiscal 2022
Fiscal 2021
Change
GAAP
Adjusted (1)
GAAP
Adjusted (1)
GAAP
Adjusted (1)
Net sales
$584.1
$448.7
30.2%
Gross margin
$219.6
$227.5
$171.6
$174.5
27.9%
30.4%
Gross margin %
37.6%
38.9%
38.3%
38.9%
Operating income
$72.2
$106.6
$81.7
$87.7
-11.6%
21.6%
Operating income %
12.4%
18.3%
18.2%
19.5%
Net income
$32.9
$76.5
$64.7
$69.5
-49.2%
10.1%
Net income available to common
stockholders
$26.6
$70.3
$64.7
$69.5
-58.9%
1.1%
Diluted EPS
$1.00
$2.64
$2.59
$2.78
-61.5%
-5.0%
Diluted Cash EPS
$4.33
$4.12
5.1%
(1) Results exclude items in
reconciliation below.
“The third quarter results significantly exceeded our
expectations as we continue to see strong organic revenue growth
from industrial markets, and with the recent addition of Dodge, we
believe that this trend will continue for the remainder of our
fiscal year,” said Dr. Michael J. Hartnett, Chairman and Chief
Executive Officer. “We continue to see encouraging signs of
improvement within aerospace, as airlines begin ordering again to
increase their fleet, which will help escalate the demand for our
aircraft bearings and assemblies. We remain committed to using our
resources to develop products that best address our customer’s
needs.”
Third Quarter Results
Net sales for the third quarter of fiscal 2022 were $267.0
million, an increase of 83.0% from $145.9 million in the third
quarter of fiscal 2021. Net sales for our Industrial segment
increased 230.4% while our Aerospace/Defense segment net sales were
flat. Gross margin for the third quarter of fiscal 2022 was $93.3
million compared to $55.6 million for the same period last year. On
an adjusted basis, gross margin was $100.3 million for the third
quarter of fiscal 2022 compared to an adjusted $56.4 million for
the same quarter last year.
SG&A for the third quarter of fiscal 2022 was $43.2 million,
an increase of $17.5 million from $25.7 million for the same period
last year. Excluding $12.0 million in costs from the Dodge
business, the increase is primarily associated with an increase in
personnel costs year over year. As a percentage of net sales,
SG&A was 16.2% for the third quarter of fiscal 2022 compared to
17.6% for the same period last year.
Other operating expenses for the third quarter of fiscal 2022
totaled $35.8 million compared to $3.3 million for the same period
last year. For the third quarter of fiscal 2022, other operating
expenses included $23.5 million of costs associated with the Dodge
acquisition, $12.1 million of amortization of intangible assets,
and $0.2 million of other items. For the third quarter of fiscal
2021, other operating expenses included $2.6 million of
amortization of intangible assets, $0.5 million of restructuring
costs and related items, and $0.2 million of other costs.
Operating income for the third quarter of fiscal 2022 was $14.4
million compared to $26.5 million for the same period last year.
Excluding $30.4 million of acquisition costs, adjusted operating
income for the third quarter of fiscal 2022 was $44.8 million.
Excluding other restructuring charges and related items of $1.3
million, adjusted operating income for the third quarter of fiscal
2021 was $27.9 million. Adjusted operating income as a percentage
of net sales was 16.8% for the third quarter of fiscal 2022
compared to 19.1% for the same period last year.
Interest expense, net, was
$11.9 million for the third quarter of fiscal 2022 compared to $0.3
million for the same period last year. During the third quarter,
the Company incurred approximately $1.1 million in costs associated
with the amortization of fees for the Bridge Commitment established
in association with the Dodge acquisition. The increase in interest
cost during the period is a result of the quarterly impact of the
permanent financing in place.
Income tax expense for the third quarter of fiscal 2022 was $1.2
million compared to $4.7 million for the same period last year. The
effective income tax rate for the third quarter of fiscal 2022 was
105.6% compared to 17.9% for the same period last year. The fiscal
2022 third quarter income tax expense included $0.5 million of tax
benefits from share-based stock compensation offset by $0.1 million
of other items. The tax rate for the third quarter was negatively
impacted by the inclusion of certain pre-tax acquisition related
charges that are not deductible for tax purposes. Income tax
expense for the third quarter of fiscal 2021 included $1.0 million
of tax benefits from share-based stock compensation.
Net loss for the third quarter
of fiscal 2022 was ($0.1) million compared to net income of $21.6
million for the same period last year. On an adjusted basis, net
income was $26.1 million for the third quarter of fiscal 2022
compared to $22.7 million for the same period last year. Net loss
available to common stockholders for the third quarter of fiscal
2022 was ($5.8) million compared to net income of $21.6 million for
the same period last year. On an adjusted basis, net income
available to common stockholders for the third quarter of fiscal
2022 was $20.3 million compared to $22.7 million for the same
period last year. Adjusted cash net income available to common
stockholders for the third quarter of fiscal 2022 was $42.2 million
compared to $33.9 million for the same period last year.
Diluted EPS for the third
quarter of fiscal 2022 was ($0.20) per share compared to $0.86 per
share for the same period last year. On an adjusted basis, diluted
EPS was $0.70 per share for the third quarter of fiscal 2022
compared to $0.90 per share for the same period last year. Diluted
cash EPS was an adjusted $1.46 per share for the third quarter of
fiscal 2022 compared to $1.35 per share for the same period last
year.
Backlog as of January 1, 2022 was $552.7 million compared to
$393.9 million as of December 26, 2020 and $456.7 million as of
October 2, 2021.
Outlook for the Fourth Quarter Fiscal
2022
The Company expects net sales to be approximately $340.0 million
to $350.0 million in the fourth quarter of fiscal 2022 including
three months of Dodge, compared to $160.3 million last year, a
growth rate of 112.1% to 118.3%.
Live Webcast
RBC Bearings Incorporated will
host a webcast on Thursday, February 10th at 11:00 a.m. ET 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 #1599777. An audio replay of the call will be
available from 2:00 p.m. ET February 10th, 2022, until 2:00 p.m. ET
February 17th, 2022. The replay can be accessed by dialing
855-859-2056 (international callers dial 404-537-3406) and
providing conference call ID #1599777. 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.
Adjusted Gross Margin and Adjusted Operating Income
Adjusted gross margin excludes the impact of acquisition related
fair value adjustments to inventory. Adjusted operating income
excludes acquisition expenses including the impact of
acquisition-related fair value adjustments in connection with
purchase, restructuring and other similar charges, gains or losses
on extinguishment of debt, and other non-operational, non-cash or
non-recurring losses. We believe that adjusted gross margin and
adjusted operating income are useful in assessing our financial
performance by excluding items that are not indicative of our core
operating performance or that may obscure trends useful in
evaluating our continuing results of operations.
Adjusted Net Income and Adjusted Earnings Per Share
Adjusted net income and adjusted earnings per share (calculated
on a diluted basis) exclude acquisition expenses including the
impact of acquisition-related fair value adjustments in connection
with purchase, restructuring and other similar charges, gains or
losses on divestitures, discontinued operations, gains or losses on
extinguishment of debt, and other non-operational, non-cash or
non-recurring losses, net of their income tax impact. The tax rates
used to calculate adjusted net income and adjusted earnings per
share are based on a transaction specific basis. We believe that
adjusted net income and adjusted earnings per share are useful in
assessing our financial performance by excluding items that are not
indicative of our core operating performance or that may obscure
trends useful in evaluating our continuing results of
operations.
Adjusted Cash Net Income and Adjusted Cash Earnings Per
Share
Adjusted cash net income and adjusted cash earnings per share
excludes non-cash expenses for depreciation and amortization of
fixed and intangible assets, stock compensation and amortization of
deferred finance fees, net of their income tax impact. We believe
that adjusted cash net income and adjusted cash earnings per share
are useful in assessing our financial performance by excluding
items that do not affect the cash available to common
stockholders.
EBITDA
EBITDA represents earnings from continuing operations before
interest and other debt related activities, taxes, depreciation and
amortization and stock compensation expense. EBITDA is presented
because it is an important supplemental measure of performance and
it is frequently used by analysts, investors and other interested
parties in the evaluation of companies in our industry. EBITDA is
also presented and compared by analysts and investors in evaluating
our ability to meet debt service obligations. Other companies in
our industry may calculate EBITDA differently. EBITDA is not a
measurement of financial performance under GAAP and should not be
considered as an alternative to cash flow from operating activities
or as a measure of liquidity or an alternative to net income as
indicators of operating performance or any other measures of
performance derived in accordance with GAAP. Because EBITDA is
calculated before recurring cash charges, including interest
expense and taxes, and is not adjusted for capital expenditures or
other recurring cash requirements of the business, it should not be
considered as a measure of discretionary cash available to invest
in the growth of the business.
Adjusted EBITDA
Adjusted EBITDA is the term we use to describe EBITDA adjusted
for the items summarized in the Reconciliation of GAAP to Non-GAAP
Financial Measures table below. Adjusted EBITDA is intended to show
our unleveraged, pre-tax operating results and therefore reflects
our financial performance based on operational factors, excluding
non-operational, non-cash or non-recurring losses or gains. In view
of our debt level, it is also provided to aid investors in
understanding our compliance with our debt covenants. Adjusted
EBITDA is not a presentation made in accordance with GAAP, and our
use of the term Adjusted EBITDA varies from others in our industry.
Adjusted EBITDA should not be considered as an alternative to net
income, income from operations or any other performance measures
derived in accordance with GAAP. Adjusted EBITDA has important
limitations as an analytical tool, and you should not consider it
in isolation, or as a substitute for, analysis of our results as
reported under GAAP. For example, Adjusted EBITDA does not reflect:
(a) our capital expenditures, future requirements for capital
expenditures or contractual commitments; (b) changes in, or cash
requirements for, our working capital needs; (c) the significant
interest expenses, or the cash requirements necessary to service
interest or principal payments, on our debt; (d) tax payments that
represent a reduction in cash available to us; (e) any cash
requirements for the assets being depreciated and amortized that
may have to be replaced in the future; or (f) the impact of
earnings or charges resulting from matters that we and the lenders
under our credit agreement may not consider indicative of our
ongoing operations. In particular, our definition of Adjusted
EBITDA allows us to add back certain non-cash, non-operating or
non-recurring charges that are deducted in calculating net income,
even though these are expenses that may recur, vary greatly and are
difficult to predict and can represent the effect of long-term
strategies as opposed to short-term results. In addition, certain
of these expenses can represent the reduction of cash that could be
used for other corporate purposes. Further, although not included
in the calculation of Adjusted EBITDA below, the measure may at
times allow us to add estimated cost savings and operating
synergies related to operational changes ranging from acquisitions
to dispositions to restructurings and/or exclude one-time
transition expenditures that we anticipate we will need to incur to
realize cost savings before such savings have occurred. Further,
management and various investors use the ratio of total debt less
cash to Adjusted EBITDA (which includes a full pro-forma
last-twelve-month impact of acquisitions), or "net debt leverage",
as a measure of our financial strength and ability to incur
incremental indebtedness when making key investment decisions and
evaluating us against peers. Lastly, management and various
investors use the ratio of the change in Adjusted EBITDA divided by
the change in net sales (referred to as “incremental margin” in the
case of an increase in net sales or “decremental margin” in the
case of a decrease in net sales) as an additional measure of our
financial performance and is utilized when making key investment
decisions and evaluating us against peers.
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, the COVID-19 pandemic, geopolitical
factors, future levels of aerospace and 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.
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,
2022
2020
2022
2020
Net sales
$ 266,953
$ 145,861
$ 584,058
$ 448,689
Cost of sales
173,608
90,273
364,476
277,052
Gross margin
93,345
55,588
219,582
171,637
Operating expenses: Selling, general and administrative
43,196
25,739
102,672
78,591
Other, net
35,778
3,308
44,693
11,328
Total operating expenses
78,974
29,047
147,365
89,919
Operating income
14,371
26,541
72,217
81,718
Interest expense, net
11,848
327
27,937
1,095
Other non-operating (income)/expense
1,395
(50)
639
203
Income before income taxes
1,128
26,264
43,641
80,420
Provision for income taxes
1,191
4,695
10,776
15,741
Net income
(63)
21,569
32,865
64,679
Preferred stock dividends
5,751
-
6,261
-
Net income/(loss) available to common stockholders
$ (5,814)
$ 21,569
$ 26,604
$ 64,679
Net income/(loss) per share available to common
stockholders: Basic
$ (0.20)
$ 0.87
$ 1.01
$ 2.61
Diluted
$ (0.20)
$ 0.86
$ 1.00
$ 2.59
Weighted average common shares: Basic
28,618,495
24,861,792
26,379,984
24,816,451
Diluted
28,618,495
25,060,812
26,663,990
24,985,848
Three Months Ended Nine Months Ended
Reconciliation of Reported Gross Margin to January 1,
December 26, January 1, December 26,
Adjusted Gross Margin:
2022
2020
2022
2020
Reported gross margin
$ 93,345
$ 55,588
$ 219,582
$ 171,637
Transaction and related costs
6,977
-
6,977
-
Restructuring and consolidation
-
835
929
2,829
Adjusted gross margin
$ 100,322
$ 56,423
$ 227,488
$ 174,466
Three Months Ended Nine Months Ended
Reconciliation of Reported Operating Income to January
1, December 26, January 1, December 26,
Adjusted Operating Income:
2022
2020
2022
2020
Reported operating income
$ 14,371
$ 26,541
$ 72,217
$ 81,718
Transaction and related costs
30,443
-
31,876
-
Restructuring and consolidation
-
1,341
2,544
5,974
Adjusted operating income
$ 44,814
$ 27,882
$ 106,637
$ 87,692
Reconciliation of Reported Net Income Available to
Three Months Ended Nine Months Ended Common
Stockholders to Adjusted Net Income Available January 1,
December 26, January 1, December 26, to
Common Stockholders:
2022
2020
2022
2020
Reported net income/(loss)
$ (63)
$ 21,569
$ 32,865
$ 64,679
Transaction and related costs
32,519
-
49,422
-
Restructuring and consolidation
-
1,341
2,543
5,974
Foreign exchange translation loss
1
224
93
446
Tax impact of adjustments and other tax matters
(6,371)
(456)
(8,382)
(1,586)
Adjusted net income
$ 26,086
$ 22,678
$ 76,541
$ 69,513
Preferred stock dividends
5,751
-
6,261
-
Adjusted net income available to common stockholders
$ 20,335
$ 22,678
$ 70,280
$ 69,513
Adjusted net income per common share: Basic
$ 0.71
$ 0.91
$ 2.66
$ 2.80
Diluted
$ 0.70
$ 0.90
$ 2.64
$ 2.78
Weighted average common shares: Basic
28,618,495
24,861,792
26,379,984
24,816,451
Diluted
28,902,501
25,060,812
26,663,990
24,985,848
Three Months Ended Nine Months Ended
January 1, December 26, January 1, December
26,
2022
2020
2022
2020
Adjusted net income available to common stockholders
$ 20,335
$ 22,678
$ 70,280
$ 69,513
Depreciation and amortization
20,498
7,979
37,355
24,812
Stock compensation expense
6,038
5,173
18,034
15,842
Amortization of deferred finance fees
773
106
985
365
Tax impact of adjustments
(5,473)
(2,003)
(11,086)
(7,526)
Adjusted cash net income available to common stockholders
$ 42,171
$ 33,933
$ 115,568
$ 103,006
Adjusted cash net income per common share: Basic
$ 1.47
$ 1.36
$ 4.38
$ 4.15
Diluted
$ 1.46
$ 1.35
$ 4.33
$ 4.12
Weighted average common shares: Basic
28,618,495
24,861,792
26,379,984
24,816,451
Diluted
28,902,501
25,060,812
26,663,990
24,985,848
Three Months Ended Nine Months
Ended Reconciliation of operating income to EBITDA to
January 1, December 26, January 1, December
26, Adjusted EBITDA:
2022
2020
2022
2020
Operating income
$ 14,371
$ 26,541
$ 72,217
$ 81,718
Depreciation and amortization
20,498
7,979
37,355
24,812
Stock compensation expense
6,038
5,173
18,034
15,842
EBITDA
$ 40,907
#
$ 39,693
$ 127,606
#
$ 122,372
Transaction and related costs
30,443
-
31,876
-
Restructuring and consolidation
-
1,341
2,544
5,974
Adjusted EBITDA
$ 71,350
$ 41,034
$ 162,026
#
$ 128,346
Three Months Ended Nine Months Ended
January 1, December 26, January 1, December
26, Selected Financial Data:
2022
2020
2022
2020
Cash provided by operating activities
$ 39,952
$ 36,107
$ 133,426
$ 110,586
Capital expenditures
$ 14,879
$ 2,801
$ 21,761
$ 8,809
Total debt
$ 1,790,253
$ 20,493
Cash on hand
$ 255,503
$ 201,731
Total debt minus cash on hand
$ 1,534,750
$ (181,238)
Repurchase of common stock
$ 7,656
$ 6,206
Backlog
$ 552,712
$ 393,934
Three Months Ended Nine Months Ended
January 1, December 26, January 1, December
26, Segment Data, Net External Sales:
2022
2020
2022
2020
Industrial segment
$ 173,750
$ 52,594
$ 307,575
$ 148,856
Aerospace and defense segment
93,203
93,267
276,483
299,833
$ 266,953
$ 145,861
$ 584,058
$ 448,689
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220210005318/en/
RBC Bearings Robert Sullivan 203-267-5014
Rsullivan@rbcbearings.com Alpha IR Group Michael Cummings
617-461-1101 investors@rbcbearings.com
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