RBC Bearings Incorporated Announces Fiscal 2022 Second Quarter Results

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OXFORD, CTRBC 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 second quarter of fiscal year 2022.

Key Highlights

  • Second quarter net sales of $160.9 million increased 10.0% over last year and were at the high end of our guidance range of $158.0 million to $162.0 million.
  • Second quarter adjusted gross margin of $63.4 million, 39.4%, was up 8.2% over the same period last year (GAAP gross margin 38.8%).
  • Second quarter year to date adjusted gross margin of $127.2 million, 40.1%, was up 7.7% over the same period last year (GAAP gross margin 39.8%).
  • Third quarter outlook shows net sales of $245.0 million to $255.0 million including two months of Dodge, a growth rate of 68.0% to 74.8%.
  • Cash provided by operating activities was $40.2 million for the second quarter compared to $26.1 million last year.

Second Quarter Financial Highlights

($ in millions)

Fiscal 2022

 

Fiscal 2021

 

Change

GAAP

Adjusted (1)

GAAP

Adjusted (1)

GAAP

Adjusted (1)

Net sales

$160.9

 

$146.3

 

10.0%

 

Gross margin

$62.5

$63.4

$56.6

$58.6

10.4%

8.2%

Gross margin %

38.8%

39.4%

38.7%

40.0%

 

 

Operating income

$27.1

$30.5

$26.4

$29.9

2.9%

2.2%

Operating income %

16.9%

19.0%

18.0%

20.4%

 

 

Net income

$6.9

$23.5

$20.4

$23.2

-66.1%

1.3%

Net income available to common stockholders

$6.4

$23.0

$20.4

$23.2

-68.6%

-0.9%

Diluted EPS

$0.25

$0.89

$0.82

$0.93

-69.5%

-4.3%

Diluted EPS - Pre-Offering

 

$0.92

 

$0.93

 

-1.1%

(1) Results exclude items in reconciliation below.

 

 

 

 

 

 

Six Month Financial Highlights

($ in millions)

Fiscal 2022

 

Fiscal 2021

 

Change

GAAP

Adjusted (1)

GAAP

Adjusted (1)

GAAP

Adjusted (1)

Net sales

$317.1

 

$302.8

 

4.7%

 

Gross margin

$126.2

$127.2

$116.0

$118.0

8.8%

7.7%

Gross margin %

39.8%

40.1%

38.3%

39.0%

 

 

Operating income

$57.8

$61.8

$55.2

$59.8

4.8%

3.4%

Operating income %

18.2%

19.5%

18.2%

19.8%

 

 

Net income

$32.9

$49.8

$43.1

$46.8

-23.6%

6.4%

Net income available to common stockholders

$32.4

$49.3

$43.1

$46.8

-24.8%

5.3%

Diluted EPS

$1.27

$1.93

$1.73

$1.88

-26.6%

2.7%

Diluted EPS - Pre-Offering

 

$1.96

 

$1.88

 

4.3%

(1) Results exclude items in reconciliation below.

 

 

 

 

 

 

“We are pleased with our second quarter results which demonstrated exceptional growth in our industrial markets and strong order flow for our aerospace and defense products. We began expanding capacity in the aerospace and defense plants during the period to support this expanded demand,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “As we consider the second half of our fiscal year, we expect robust strength for industrial products and strong and continuing growth in aerospace and defense.”

Second Quarter Results

Net sales for the second quarter of fiscal 2022 were $160.9 million, an increase of 10.0% from $146.3 million in the second quarter of fiscal 2021. Net sales for the industrial markets increased 31.1% while aerospace market net sales declined 4.4%. Gross margin for the second quarter of fiscal 2022 was $62.5 million compared to $56.6 million for the same period last year. On an adjusted basis, gross margin was $63.4 million for the second quarter of fiscal 2022 compared to an adjusted $58.6 million for the same quarter last year.

SG&A for the second quarter of fiscal 2022 was $29.7 million, an increase of $3.7 million from $26.0 million for the same period last year. The increase was primarily due to higher personnel-related costs of $2.4 million, $1.0 million of additional share-based compensation and $0.3 million of other items. As a percentage of net sales, SG&A was 18.4% for the second quarter of fiscal 2022 compared to 17.8% for the same period last year.

Other operating expenses for the second quarter of fiscal 2022 totaled $5.7 million compared to $4.2 million for the same period last year. For the second quarter of fiscal 2022, other operating income consisted primarily of $2.8 million of amortization of intangibles, $1.4 million of acquisition costs, $1.1 million of restructuring costs and related items and $0.4 million of other items. For the second quarter of fiscal 2021, other operating expenses consisted primarily of $1.5 million of restructuring costs and related items, $2.6 million of amortization of intangible assets and $0.1 million of other items.

Operating income for the second quarter of fiscal 2022 was $27.1 million compared to $26.4 million for the same period last year. Excluding $2.0 million of other restructuring charges and related items and $1.4 million of acquisition costs, adjusted operating income for the second quarter of fiscal 2022 was $30.5 million. Excluding other restructuring charges and related items of $3.5 million, adjusted operating income for the second quarter of fiscal 2021 was $29.9 million. Adjusted operating income as a percentage of net sales was 19.0% for the second quarter of fiscal 2022 compared to 20.4% for the same period last year.

Interest expense, net was $15.8 million for the second quarter of fiscal 2022 compared to $0.3 million for the same period last year. During the second quarter of fiscal 2022, the Company incurred approximately $15.5 million in costs associated with the amortization of a bridge financing commitment obtained in support of the Dodge acquisition.

Income tax expense for the second quarter of fiscal 2022 was $4.7 million compared to $5.4 million for the same period last year. The effective income tax rate for the second quarter of fiscal 2022 was 40.5% compared to 20.9% for the same period last year. The fiscal 2022 second quarter income tax expense included $0.1 million of tax benefits from share-based stock compensation offset by the establishment of a $1.9 million valuation allowance for capital loss carryforwards we don’t expect to recognize and $0.1 million of other items. Income tax expense for the second quarter of fiscal 2021 included $0.4 million of tax benefits from share-based stock compensation.

Net income for the second quarter of fiscal 2022 was $6.9 million compared to $20.4 million for the same period last year. On an adjusted basis, net income was $23.5 million for the second quarter of fiscal 2022 compared to $23.2 million for the same period last year. Net income available to common stockholders for the second quarter of fiscal 2022 was $6.4 million compared to $20.4 million for the same period last year. On an adjusted basis, net income available to common stockholders for the second quarter of fiscal 2022 was $23.0 million compared to $23.2 million for the same period last year.

Diluted EPS for the second quarter of fiscal 2022 was $0.25 per share compared to $0.82 per share for the same period last year. On an adjusted basis, diluted EPS was $0.89 per share for the second quarter of fiscal 2022 compared to $0.93 per share for the same period last year. Diluted EPS before the offering of common and preferred stock would have been an adjusted $0.92 per share for the second quarter of fiscal 2022 compared to $0.93 per share for the same period last year.

Backlog as of October 2, 2021 was $456.7 million compared to $403.0 million as of September 26, 2020 and $420.2 million as of July 3, 2021.

Dodge Acquisition

On November 1, 2021, the Company completed the acquisition of Dodge for $2.9 billion in cash, subject to certain purchase price adjustments. The acquisition was financed with approximately $1.1 billion of cash which included $605.7 million from the sale of common equity and $445.5 million from the sale of mandatorily convertible preferred stock (“MCPS”), $1.3 billion of senior debt and $500.0 million of unsecured debt.

Outlook for the Third Quarter Fiscal 2022

The Company expects net sales to be approximately $245.0 million to $255.0 million in the third quarter of fiscal 2022 including two months of Dodge, compared to $145.9 million last year, a growth rate of 68.0% to 74.8%.

Live Webcast

RBC Bearings Incorporated will host a webcast on Friday, November 12th 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 #7460907. An audio replay of the call will be available from 1:00 p.m. ET November 12, 2021 until 1:00 p.m. ET November 19, 2021. The replay can be accessed by dialing 855-859-2056 (international callers dial 404-537-3406) and providing conference call ID #7460907. 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, 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 EndedSix Months Ended
October 2,September 26,October 2,September 26,

2021

 

2020

 

2021

 

2020

Net sales

 $

      160,900

 $

      146,335

 $

      317,105

 $

      302,828

Cost of sales

 

           98,436

 

           89,739

 

         190,868

 

         186,779

Gross margin

 

           62,464

 

           56,596

 

         126,237

 

         116,049

 
Operating expenses:
Selling, general and administrative

 

           29,674

 

           26,023

 

           59,476

 

           52,852

Other, net

 

            5,667

 

            4,210

 

            8,915

 

            8,020

Total operating expenses

 

           35,341

 

           30,233

 

           68,391

 

           60,872

 
Operating income

 

           27,123

 

           26,363

 

           57,846

 

           55,177

 
Interest expense, net

 

           15,770

 

               343

 

           16,089

 

               768

Other non-operating (income)/expense

 

              (291)

 

               211

 

              (756)

 

               253

Income before income taxes

 

           11,644

 

           25,809

 

           42,513

 

           54,156

Provision for income taxes

 

            4,715

 

            5,388

 

            9,585

 

           11,046

Net income

 

            6,929

 

           20,421

 

           32,928

 

           43,110

Preferred stock dividends

 

               510

 

                    -

 

               510

 

                    -

Net income available to common stockholders

 $

          6,419

 $

        20,421

 $

        32,418

 $

        43,110

 
Net income per share available to common stockholders:
Basic

 $

           0.25

 $

           0.82

 $

           1.28

 $

           1.74

Diluted

 $

           0.25

 $

           0.82

 $

           1.27

 $

           1.73

 
Weighted average common shares:
Basic

 

    25,500,393

 

    24,823,658

 

    25,260,728

 

    24,793,245

Diluted

 

    25,775,794

 

    24,957,158

 

    25,544,088

 

    24,944,608

 
Three Months EndedSix Months Ended
Reconciliation of Reported Gross Margin toOctober 2,September 26,October 2,September 26,
Adjusted Gross Margin:

2021

 

2020

 

2021

 

2020

Reported gross margin

 $

        62,464

 $

        56,596

 $

      126,237

 $

      116,049

Restructuring and consolidation

 

               929

 

            1,994

 

               929

 

            1,994

Adjusted gross margin

 $

        63,393

 $

        58,590

 $

      127,166

 $

      118,043

 
Three Months EndedSix Months Ended
Reconciliation of Reported Operating Income toOctober 2,September 26,October 2,September 26,
Adjusted Operating Income:

2021

 

2020

 

2021

 

2020

Reported operating income

 $

        27,123

 $

        26,363

 $

        57,846

 $

        55,177

Acquisition costs

 

            1,433

 

                    -

 

            1,433

 

                    -

Restructuring and consolidation

 

            1,987

 

            3,514

 

            2,544

 

            4,633

Adjusted operating income

 $

        30,543

 $

        29,877

 $

        61,823

 $

        59,810

 
Reconciliation of Reported Net Income and Net IncomeThree Months EndedSix Months Ended
Per Common Share to Adjusted Net Income andOctober 2,September 26,October 2,September 26,
Adjusted Net Income Per Common Share:

2021

 

2020

 

2021

 

2020

Reported net income

 $

          6,929

 $

        20,421

 $

        32,928

 $

        43,110

Acquisition and related financing costs (1)

 

           13,049

 

                    -

 

           13,049

 

                    -

Restructuring and consolidation (1)

 

            1,534

 

            2,780

 

            2,003

 

            3,676

Foreign exchange translation loss (1)

 

                 61

 

               115

 

                 72

 

               176

Discrete and other tax items benefit

 

            1,952

 

              (102)

 

            1,792

 

              (127)

Adjusted net income

 $

        23,525

 $

        23,214

 $

        49,844

 $

        46,835

 
Preferred stock dividends

 

               510

 

                    -

 

               510

 

                    -

 
Adjusted net income available to common stockholders

 $

        23,015

 $

        23,214

 $

        49,334

 $

        46,835

(1) After tax impact.  Tax rate of 22.8% applied in the three months ended October 2, 2021.

Adjusted net income per common share:
Basic

 $

           0.90

 $

           0.94

 $

           1.95

 $

           1.89

Diluted

 $

           0.89

 $

           0.93

 $

           1.93

 $

           1.88

Diluted - Pre-Offering

 $

           0.92

 $

           0.93

 $

           1.96

 $

           1.88

 
Weighted average common shares:
Basic

 

    25,500,393

 

    24,823,658

 

    25,260,728

 

    24,793,245

Diluted

 

    25,775,794

 

    24,957,158

 

    25,544,088

 

    24,944,608

Diluted - Pre-Offering (1)

 

    25,434,586

 

    24,957,158

 

    25,373,484

 

    24,944,608

(1) Excludes the three- and six-month impact of the common stock and MCPS offerings of 341,208 and 170,604 weighted average shares, respectively.

Three Months EndedSix Months Ended
October 2,September 26,October 2,September 26,
Segment Data, Net External Sales:

2021

 

2020

 

2021

 

2020

Plain bearings segment

 $

        74,079

 $

        71,053

 $

      147,400

 $

      149,928

Roller bearings segment

 

           27,309

 

           21,579

 

           52,556

 

           44,479

Ball bearings segment

 

           24,431

 

           21,099

 

           47,559

 

           39,939

Engineered products segment

 

           35,081

 

           32,604

 

           69,590

 

           68,482

 $

      160,900

 $

      146,335

 $

      317,105

 $

      302,828

 
 
Three Months EndedSix Months Ended
 October 2,September 26,October 2,September 26,
Selected Financial Data:

2021

 

2020

 

2021

 

2020

Depreciation and amortization

 $

          8,645

 $

          8,437

 $

        16,857

 $

        16,833

 
Share-based stock compensation expense

 

            6,224

 

            5,231

 

           11,996

 

           10,669

 
Adjusted operating income plus depreciation/amortization
plus share-based stock compensation expense

 $

        45,412

 $

        43,545

 $

        90,676

 $

        87,312

 
 
Cash provided by operating activities

 $

        40,181

 $

        26,120

 $

        93,474

 $

        74,479

 
Capital expenditures

 $

          3,515

 $

          2,133

 $

          6,882

 $

          6,008

 
Total debt

 $

          7,605

 $

        20,392

 
Cash on hand

 $

      297,481

 $

      166,352

Cash from equity offerings

 

      1,051,130

 

                  -  

Total cash 

 $

   1,348,611

 $

      166,352

 
Repurchase of common stock

 $

          6,356

 $

          4,399

 
Backlog

 $

      456,741

 $

      402,958

 
 
 Three Months Ended  Six Months Ended 
October 2,September 26,October 2,September 26,
Net External Sales by Channel (1)

2021

 

2020

 

2021

 

2020

Aerospace:
Commercial - OEM

 $

        42,700

 $

        46,285

 $

        85,581

 $

      101,745

Commercial - Aftermarket/Distribution

 

           11,088

 

           10,853

 

           23,327

 

           26,297

Defense 

 

           29,494

 

           30,003

 

           55,267

 

           58,081

 

           83,282

 

           87,141

 

         164,175

 

         186,123

Industrial:
OEM and Marine

 

           53,660

 

           40,232

 

         104,390

 

           79,600

Aftermarket/Distribution

 

           23,958

 

           18,962

 

           48,540

 

           37,105

 

           77,618

 

           59,194

 

         152,930

 

         116,705

 

 $

      160,900

 $

      146,335

 $

      317,105

 $

      302,828

(1) End markets in each period presented are based on internal definitions and metrics considered by management and are periodically reviewed and updated when evaluating the performance of the business.

RBC Bearings
Robert Sullivan
203-267-5014
Rsullivan@rbcbearings.com

Alpha IR Group
Michael Cummings
617-461-1101
investors@rbcbearings.com

Source: RBC Bearings Incorporated