Press release
RBC Bearings Incorporated Announces Fiscal 2010 First Quarter Results
Oxford, CT – August 5, 2009 – RBC Bearings Incorporated (Nasdaq: ROLL), a leading international manufacturer of highly-engineered precision plain, roller and ball bearings for the industrial, defense and aerospace industries, today reported results for the first quarter of fiscal year 2010.
First Quarter Highlights
| | | Q1 Fiscal 2010 | | | Q1 Fiscal 2009 | | | Change | |
| ($ in millions) | | GAAP | | | Adjusted (1) | | | GAAP | | | Adjusted (1) | | | GAAP | | | Adjusted (1) | |
| Net sales | | $ | 63.7 | | | | | | $ | 92.4 | | | | | | | -31.0 | % | | | |
| Gross margin | | $ | 19.9 | | | $ | 20.4 | | | $ | 30.6 | | | $ | 31.0 | | | | -34.9 | % | | | -34.1 | % |
| Gross margin % | | | 31.2 | % | | | 32.0 | % | | | 33.1 | % | | | 33.5 | % | | | | | | | | |
| Operating income | | $ | 7.8 | | | $ | 8.5 | | | $ | 17.0 | | | $ | 17.6 | | | | -54.4 | % | | | -51.7 | % |
| Net income | | $ | 5.1 | | | $ | 5.3 | | | $ | 10.7 | | | $ | 11.2 | | | | -52.6 | % | | | -52.4 | % |
| Diluted EPS | | $ | 0.23 | | | $ | 0.25 | | | $ | 0.49 | | | $ | 0.51 | | | | -53.1 | % | | | -51.0 | % |
(1) Results exclude items listed in reconciliation below.
“During the period we, like other companies serving our industries, experienced a decline in demand from many of our primary markets attributed to the current broad economic conditions,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “We took early and pre-emptive action to balance our revenues and costs while preserving the infrastructure necessary to support a post crisis expansion. Given these conditions, I am satisfied with the financial results for our first quarter. Our new product agenda is healthy, important new accounts are being added, our liquidity is very good and our debt ratios outstanding. We are well positioned to navigate through this environment and expect the balance of our year will show improved results as the national economy improves and many of our important markets strengthen.”
First Quarter Results
Net sales for the first quarter of fiscal 2010 were $63.7 million, a decrease of 31.0% from $92.4 million in the first quarter of fiscal 2009. The decline in net sales was mainly the result of a 46.3% drop in industrial sales due to the current economic climate. Aerospace and defense were less impacted and decreased by 18.1%. Gross margin for the first quarter was $19.9 million compared to $30.6 million for the same period last year. Gross margin as a percentage of net sales was 31.2% in the first quarter of fiscal 2010 compared to 33.1% for the same period last year.
Operating income for the first quarter of fiscal 2010 was $7.8 million, a decrease of 54.4% compared to operating income of $17.0 million for the same period last year. As a percentage of net sales, operating income was 12.2% compared to 18.5% for the same period last year. Operating income, excluding adjustments, was $8.5 million, a decrease of 51.7% compared to the same period last year. As a percentage of sales, operating income, excluding adjustments, was 13.3% compared to 19.0% for the same period last year.
Interest expense, net for the first quarter of fiscal 2010 was $0.5 million, a decrease of $0.2 million, from $0.7 million for the same period last year.
Other non-operating expense (income) was ($0.3) million for the first quarter of fiscal 2010. This was mainly comprised of foreign exchange gains on inter-company loans between our U.S. division and International division. Since these loans are not considered long-term in nature, the resulting translation gains and losses are included in net income.
Net income for the first quarter of fiscal 2010 decreased 52.6% to $5.1 million compared to $10.7 million for the same period last year. Excluding adjustments, net income decreased 52.4% to $5.3 million compared to $11.2 million for the same period last year.
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 888-396-2386 (international callers dial 617-847-8712) and enter conference call ID # 42425600. An audio replay of the call will be available from 2:00 p.m. ET on Wednesday, August 5th, until 11:59 p.m. ET on Wednesday, August 12th. The replay can be accessed by dialing 888-286-8010 (international callers dial 617-801-6888) and entering conference call ID # 58181049.
Non-GAAP Financial Measures
In addition to disclosing results of operations that are determined in accordance with generally accepted accounting principles (“GAAP”), this press release also discloses non-GAAP results of operations that exclude certain charges. These non-GAAP measures adjust for charges 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 the 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 requiring sophisticated design, testing, and manufacturing capabilities for the diversified industrial, aerospace, and defense markets. Headquartered in Oxford, Connecticut, RBC Bearings currently employs approximately 1,813 people and operates 22 manufacturing facilities in four countries.
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, the Company’s ability to meet its debt obligations, 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 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
FD
Michael Cummings
617-747-1796
investors@rbcbearings.com
RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)
| | | Three Months Ended | |
| | | June 27, | | | June 28, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net sales | | $ | 63,732 | | | $ | 92,380 | |
| Cost of sales | | | 43,828 | | | | 61,825 | |
| Gross margin | | | 19,904 | | | | 30,555 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| Selling, general and administrative | | | 11,619 | | | | 13,127 | |
| Other, net | | | 506 | | | | 382 | |
| Total operating expenses | | | 12,125 | | | | 13,509 | |
| | | | | | | | | |
| Operating income | | | 7,779 | | | | 17,046 | |
| | | | | | | | | |
| Interest expense, net | | | 469 | | | | 681 | |
| Loss on early extinguishment of debt | | | - | | | | 319 | |
| Other non-operating income | | | (325 | ) | | | (83 | ) |
| Income before income taxes | | | 7,635 | | | | 16,129 | |
| Provision for income taxes | | | 2,568 | | | | 5,446 | |
| Net income | | $ | 5,067 | | | $ | 10,683 | |
| | | | | | | | | |
| Net income per common share: | | | | | | | | |
| Basic | | $ | 0.23 | | | $ | 0.50 | |
| Diluted | | $ | 0.23 | | | $ | 0.49 | |
| | | | | | | | | |
| Weighted average common shares: | | | | | | | | |
| Basic | | | 21,582,607 | | | | 21,561,375 | |
| Diluted | | | 21,691,059 | | | | 21,782,020 | |
RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)
| | | Three Months Ended | |
| | | June 27, | | | June 28, | |
| Reconciliation of Reported Operating Income to Adjusted Operating Income: | | 2009 | | | 2008 | |
| | | | | | | |
| Reported operating income | | $ | 7,779 | | | $ | 17,046 | |
| Large bearing start-up costs | | | 482 | | | | 398 | |
| Restructuring and moving costs | | | 208 | | | | 98 | |
| Disposal of fixed assets | | | 19 | | | | 30 | |
| Adjusted operating income | | $ | 8,488 | | | $ | 17,572 | |
| Reconciliation of Reported Net Income and | | Three Months Ended | |
| Net Income Per Common Share to Adjusted Net | | June 27, | | | June 28, | |
| Income and Adjusted Net Income Per Common Share: | | 2009 | | | 2008 | |
| | | | | | | |
| Reported net income | | $ | 5,067 | | | $ | 10,683 | |
| Large bearing start-up costs (1) | | | 320 | | | | 264 | |
| Restructuring and moving costs (1) | | | 138 | | | | 65 | |
| Disposal of fixed assets (1) | | | 13 | | | | 20 | |
| Loss on early extinguishment of debt (1) | | | - | | | | 211 | |
| Foreign exchange loss(gain) on inter-company loans (1) | | | (216 | ) | | | (55 | ) |
| Adjusted net income | | $ | 5,322 | | | $ | 11,188 | |
| (1) Item was tax effected at the effective tax rate. | | | | | | | | |
| | | | | | | | | |
| Adjusted net income per common share: | | | | | | | | |
| Basic | | $ | 0.25 | | | $ | 0.52 | |
| Diluted | | $ | 0.25 | | | $ | 0.51 | |
| | | | | | | | | |
| Adjusted weighted average common shares: | | | | | | | | |
| Basic | | | 21,582,607 | | | | 21,561,375 | |
| Diluted | | | 21,691,059 | | | | 21,782,020 | |
RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)
| | | Three Months Ended | |
| | | June 27, | | | June 28, | |
| Segment Data, Net External Sales: | | 2009 | | | 2008 | |
| | | | | | | |
| Roller bearings segment | | $ | 15,568 | | | $ | 24,957 | |
| Plain bearings segment | | | 31,000 | | | | 43,715 | |
| Ball bearings segment | | | 12,242 | | | | 15,046 | |
| Other segment | | | 4,922 | | | | 8,662 | |
| | | $ | 63,732 | | | $ | 92,380 | |
| | | Three Months Ended | |
| | | June 27, | | | June 28, | |
| Selected Financial Data: | | 2009 | | | 2008 | |
| | | | | | | |
| Depreciation and amortization | | $ | 2,891 | | | $ | 3,166 | |
| | | | | | | | | |
| Incentive stock compensation expense | | $ | 746 | | | $ | 552 | |
| | | | | | | | | |
| Cash provided by operating activities | | $ | 16,769 | | | $ | 21,713 | |
| | | | | | | | | |
| Capital expenditures | | $ | 4,270 | | | $ | 4,569 | |
| | | | | | | | | |
| Total debt | | $ | 68,151 | | | $ | 51,250 | |
| | | | | | | | | |
| Cash and short-term investments | | $ | 43,428 | | | $ | 13,397 | |
| | | | | | | | | |
| Total debt minus cash and short-term investments | | $ | 24,723 | | | $ | 37,853 | |
| | | | | | | | | |
| Backlog | | $ | 170,929 | | | $ | 239,892 | |
