Shop Now!OXFORD, Conn.--(BUSINESS WIRE)--June 12, 2007--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 fourth quarter and fiscal year ended March 31, 2007.
Fourth Quarter Highlights
Q4 Fiscal 2007 Q4 Fiscal 2006 Change
Adjusted Adjusted Adjusted
($ in millions) GAAP (1) GAAP (1) GAAP (1)
-------------- -------------- --------------
Net sales $81.0 $75.8 7.0%
Gross margin $28.6 $23.3 22.4%
Gross margin % 35.2% 30.8%
Operating income $11.5 $17.2 $12.3 $13.5 -6.7% 27.7%
Net income $6.7 $10.4 $6.0 $6.7 12.8% 54.2%
Diluted EPS $0.31 $0.48 $0.33 $0.38 -6.1% 26.3%
(1) Results exclude items listed in reconciliation below.
Fiscal Year Highlights
Fiscal Year 2007 Fiscal Year 2006 Change
Adjusted Adjusted Adjusted
($ in millions) GAAP (1) GAAP (1) GAAP (1)
---------------- ---------------- --------------
Net sales $306.1 $274.5 11.5%
Gross margin $100.1 $82.9 20.7%
Gross margin % 32.7% 30.2%
Operating income $51.9 $57.8 $38.6 $45.4 34.6% 27.5%
Net income $28.5 $33.8 $12.4 $19.3 128.9% 75.1%
Diluted EPS $1.33 $1.59 $0.76 $1.23 75.0% 29.3%
(1) Results exclude items listed in reconciliation below.
"Fiscal 2007 was a strong year for RBC Bearings," said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. "Our results were highlighted by total sales growth of over 10 percent and continued operating margin expansion. We broadened our customer base, expanded our offering and created new growth opportunities throughout the company. Our employees have done an excellent job executing and implementing our strategy, and we are well-positioned to continue our growth initiatives. As we move forward, we believe favorable industry fundamentals coupled with our focus on continuous improvement will help us to expand our market position."
Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2007 were $81.0 million, an increase of 7.0% from $75.8 million in the fourth quarter of fiscal 2006. Gross margin for the fourth quarter rose 22.4% to $28.6 million compared to $23.3 million for the same period last year. Gross margin as a percentage of net sales improved to 35.2% in the fourth quarter of fiscal 2007 compared to 30.8% for the same period last year. The improvement in gross margin percentage was mainly driven by volume, mix, and continued cost reduction.
Operating income excluding stock compensation expense, Nice facility consolidation expense, Tyson facility consolidation expense, and disposal of fixed assets was $17.2 million, an increase of 27.7% compared to adjusted operating income of $13.5 million for the same period last year. As a percentage of net sales, operating income excluding these charges was 21.2% compared to 17.8% for the same adjusted period last year. Reported operating income, including these charges, decreased 6.7% to $11.5 million for the fourth quarter of fiscal 2007 compared to $12.3 million for the same period last year.
Interest expense, net for the fourth quarter of fiscal 2007 was $0.9 million, a decrease of $2.3 million, from $3.2 million for the same period last year. This was driven primarily by debt repayments.
Net income excluding the after-tax impact of stock compensation expense, Nice facility consolidation expense, Tyson facility consolidation expense, and disposal of fixed assets, increased 54.2% to $10.4 million compared to $6.7 million for the same adjusted period last year. Reported net income, including these charges, was $6.7 million compared to $6.0 million in the same period last year.
Fiscal Year Results
Net sales for the fiscal year ended March 31, 2007 were $306.1 million, an increase of 11.5% from $274.5 million for the same period ended April 1, 2006. Gross margin rose 20.7% to $100.1 million compared to $82.9 million for the same fiscal period last year. Gross margin as a percentage of net sales improved to 32.7% for fiscal 2007 compared to 30.2% for the same period last year. The improvement in gross margin percentage was mainly driven by volume, mix, pricing, and continued cost reduction.
For the fiscal year ended March 31, 2007, the Company reported operating income of $51.9 million compared to $38.6 million for the same period last year. Operating income excluding stock compensation expense, non-recurring compensation expense, management service fees, Nice facility consolidation expense, gain on the sale of the Nice building, Tyson facility consolidation expense, and disposal of fixed assets increased 27.5% to $57.8 million for the fiscal year ended March 31, 2007 compared to $45.4 million for the comparable adjusted period last year. Operating income as a percentage of net sales excluding these charges was 18.9% for fiscal 2007 compared to 16.5% for the same adjusted period last year.
Interest expense, net for the fiscal year ended March 31, 2007 was $5.5 million, a decrease of $10.2 million, from $15.7 million for the same period last year. This was driven primarily by debt repayments.
Net income for the fiscal year ended March 31, 2007 was $28.5 million compared to net income of $12.4 million for the same period last year. Net income excluding the after tax impact of stock compensation expense, non-recurring compensation expense, management service fees, Nice facility consolidation expense, gain on the sale of the Nice building, Tyson facility consolidation expense, disposal of fixed assets, loss on early extinguishment of debt, and the CDSOA payment, increased 75.1% to $33.8 million for fiscal 2007 compared to $19.3 million for the same adjusted period last year.
Consolidation of Tapered Bearing Manufacturing Facilities
In January 2007, the Company began the consolidation of its tapered bearing manufacturing capacity. The Company has discontinued manufacturing tapered bearings in its Glasgow, Kentucky facility and has consolidated the manufacturing into other RBC manufacturing facilities. The consolidation is anticipated to result in gross margin improvement for this product line over the next 12 months. This consolidation resulted in a charge of approximately $5.1 million in the fourth quarter of fiscal year 2007. Approximately $2.2 million of this charge is a non-cash disposal of fixed assets.
Outlook
"As we look forward to fiscal 2008, most of the markets we serve, our business fundamentals, and our strategy remain strong. Our team is focused on generating profitable growth through volume and mix-driven margin expansion, execution on cost reduction initiatives, new product development, and strategic and accretive acquisitions that complement our current capabilities. We remain committed to delivering outstanding customer service and increasing shareholder value."
Based on current market conditions, the Company expects financial performance in its first quarter of fiscal 2008 to be as follows:
- Net sales in the range of $79.0 - $80.0 million
- Operating income in the range of $14.0 - $14.9 million
Live Webcast
RBC Bearings Incorporated will host a webcast at 10:30 a.m. ET today to discuss the quarterly and annual results. To access the webcast, go to the investor relations portion of the Company's web site, 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 800-510-9836 (international callers dial 617-614-3670) and enter conference call ID # 19709083. An audio replay of the call will be available from 12:30 p.m. ET on Tuesday, June 12th, until 11:59 p.m. ET on Friday, June 29th. The replay can be accessed by dialing 888-286-8010 (international callers dial 617-801-6888) and entering conference call ID # 97530980.
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 1,900 people and operates 17 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.
RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)
Three Months Ended Fiscal Year Ended
------------------------- -------------------------
March 31, April 1, March 31, April 1,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Net sales $ 81,039 $ 75,751 $ 306,062 $ 274,509
Cost of sales 52,485 52,427 205,953 191,561
------------ ------------ ------------ ------------
Gross margin 28,554 23,324 100,109 82,948
Operating
expenses:
Selling, general
and
administrative 11,257 9,620 42,256 41,945
Other, net 5,819 1,404 5,934 2,424
------------ ------------ ------------ ------------
Total operating
expenses 17,076 11,024 48,190 44,369
Operating income 11,478 12,300 51,919 38,579
Interest expense,
net 915 3,153 5,505 15,735
Loss on early
extinguishment of
debt - - 3,576 3,771
Other non-
operating
expense(income) (2) - (1,229) -
------------ ------------ ------------ ------------
Income before
income taxes 10,565 9,147 44,067 19,073
Provision for
income taxes 3,847 3,192 15,588 6,634
------------ ------------ ------------ ------------
Net income 6,718 5,955 28,479 12,439
Preferred stock
dividends - - - (893)
Participation
rights of
preferred stock
in undistributed
earnings - - - (630)
------------ ------------ ------------ ------------
Net income
available to
common
stockholders $ 6,718 $ 5,955 $ 28,479 $ 10,916
============ ============ ============ ============
Net income per
common share:
Basic $ 0.32 $ 0.35 $ 1.38 $ 0.84
Diluted $ 0.31 $ 0.33 $ 1.33 $ 0.76
Weighted average
common shares:
Basic 21,153,588 16,777,522 20,579,498 12,931,185
Diluted 21,714,939 17,887,514 21,335,307 14,452,264
Reconciliation of Reported Operating Income to Adjusted Operating
Income:
Three Months Ended Fiscal Year Ended
------------------ ------------------
March 31, April 1, March 31, April 1,
2007 2006 2007 2006
--------- -------- --------- --------
Reported operating income $ 11,478 $12,300 $ 51,919 $38,579
Stock compensation expense 255 158 766 365
Non-recurring compensation
expense - - - 5,200
Management service fees - - - 173
Nice facility consolidation
expense - 1,024 367 1,024
Tyson facility consolidation
expense 5,088 - 5,088 -
Gain on sale of Nice building - - (807) -
Disposal of fixed assets 392 (6) 513 24
--------- -------- --------- --------
Adjusted operating income $ 17,213 $13,476 $ 57,846 $45,365
Reconciliation of Reported Net Income and Net Income Per Common Share
to Adjusted Net Income and Adjusted Net Income Per Common Share:
Three Months Ended Fiscal Year Ended
------------------------- -------------------------
March 31, April 1, March 31, April 1,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Reported net
income $ 6,718 $ 5,955 $ 28,479 $ 12,439
Stock
compensation
expense 162 103 495 238
Non-recurring
compensation
expense - - - 3,391
Management
service fees - - - 113
Nice facility
consolidation
expense - 667 237 668
Tyson facility
consolidation
expense 3,235 - 3,288 -
Gain on sale of
Nice building - - (522) -
Disposal of fixed
assets 249 (4) 332 16
Loss on early
extinguishment
of debt - - 2,311 2,459
CDSOA payment (1) - (794) -
------------ ------------ ------------ ------------
Adjusted net
income (1) 10,363 6,721 33,826 19,324
Preferred stock
dividends - - - (893)
Participation
rights of
preferred stock
in undistributed
earnings - - - (630)
------------ ------------ ------------ ------------
Adjusted net
income available
to common
stockholders (1) $ 10,363 $ 6,721 $ 33,826 $ 17,801
============ ============ ============ ============
Adjusted net
income per common
share (1):
Basic $ 0.49 $ 0.40 $ 1.64 $ 1.38
Diluted $ 0.48 $ 0.38 $ 1.59 $ 1.23
Weighted average
common shares:
Basic 21,153,588 16,777,522 20,579,498 12,931,185
Diluted 21,714,939 17,887,514 21,335,307 14,452,264
(1) Items were tax effected at the effective tax rate.
Segment Data, Net External Sales:
Three Months Ended Fiscal Year Ended
------------------- -------------------
March 31, April 1, March 31, April 1,
2007 2006 2007 2006
--------- --------- --------- ---------
Roller bearing segment $ 23,178 $ 25,273 $ 92,123 $ 96,466
Plain bearing segment 39,657 33,013 143,907 115,091
Ball bearing segment 12,744 13,139 50,466 46,378
Other segment 5,460 4,326 19,566 16,574
--------- --------- --------- ---------
$ 81,039 $ 75,751 $306,062 $274,509
========= ========= ========= =========
Selected Financial Data:
Three Months Ended Fiscal Year Ended
------------------ -------------------
March 31, April 1, March 31, April 1,
2007 2006 2007 2006
--------- -------- --------- ---------
Depreciation and amortization $ 2,115 $ 2,193 $ 9,646 $ 9,331
Cash provided by operating
activities $ 13,535 $11,478 $ 55,735 $ 24,642
Capital expenditures $ 8,143 $ 2,569 $ 16,174 $ 10,341
Total debt $ 59,405 $165,747
Cash on hand $ 5,184 $ 16,126
Total debt minus cash on hand $ 54,221 $149,621
Backlog $176,578 $160,761
CONTACT: RBC Bearings
Daniel A. Bergeron, 203-267-5028
dbergeron@rbcbearings.com
or
Ashton Partners
Lauren Murphy and Steve Calk, 800-281-1163
investors@rbcbearings.com
SOURCE: RBC Bearings Incorporated