Shop Now!OXFORD, Conn.--(BUSINESS WIRE)--Nov. 3, 2006--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 second quarter ended September 30, 2006.
Second Quarter Highlights
----------------------------------------------------------------------
($ in millions) Q2 Fiscal 2007 Q2 Fiscal 2006 Change
GAAP Adjusted GAAP Adjusted GAAP Adjusted
(1) (1) (1)
------ -------- ------- -------- ------ --------
Net sales $73.2 $65.4 12.1%
Gross margin $23.5 $20.0 17.6%
Gross margin % 32.1% 30.6%
Operating income $12.6 $13.0 $5.1 $10.4 147.6% 24.7%
Net income $7.4 $7.6 ($2.0) $3.7 NM 105.9%
Diluted EPS $0.35 $0.36 ($0.18) $0.23 NM 56.5%
(1) Results exclude items listed in reconciliation.
"RBC delivered another quarter of strong performance," said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. "Revenues grew slightly better than expected and gross margins improved as planned, as business continues to exceed the metrics we planned for this fiscal year. In addition, we acquired All Power Manufacturing Co. during the quarter, which was a minor contributor to the quarter's results. All Power's track record with clients, superior processes and high quality products both compliment and extend our product line. Looking ahead, we expect that our performance for the balance of the fiscal year will continue to be strong."
Second Quarter Results
Net sales for the second quarter of fiscal 2007 were $73.2 million, an increase of 12.1% from $65.4 million in the second quarter of fiscal 2006. Gross margin for the second quarter rose 17.6% to $23.5 million compared to $20.0 million for the same period last year. Gross margin as a percentage of net sales improved to 32.1% in the second quarter of fiscal 2007 compared to 30.6% for the same period last year.
Operating income increased 147.6% to $12.6 million for the second quarter of fiscal 2007 compared to $5.1 million for the same period last year. Operating income as a percentage of net sales was 17.2% for the second quarter of fiscal 2007 compared to 7.8% for the same period last year. Operating income excluding stock compensation expense, plant consolidation cost, and disposal of fixed assets was $13.0 million, an increase of 24.7% compared to adjusted operating income for the same period last year. As a percentage of net sales, operating income excluding these charges was 17.8% compared to 16.0% for the same adjusted period last year.
Interest expense, net for the second quarter of fiscal 2007 was $1.2 million, a decrease of $3.3 million, from $4.5 million for the same period last year.
For the second quarter of fiscal 2007, the Company reported net income of $7.4 million compared to a net loss of $2.0 million in the same period last year. Net income excluding the after tax impact of stock compensation expense, plant consolidation cost, and disposal of fixed assets increased 105.9% to $7.6 million compared to $3.7 million for the same adjusted period last year.
Six Month Results
Net sales for the six month period ended September 30, 2006 were $148.5 million, an increase of 13.0% from $131.4 million for the six month period ended October 1, 2005. Gross margin rose 19.7% to $47.0 million compared to $39.3 million for the same six month period last year. Gross margin as a percentage of net sales improved to 31.7% for the first six months of fiscal 2007 compared to 29.9% for the same period last year.
For the six month period ended September 30, 2006, the Company reported operating income of $26.1 million compared to $15.5 million for the same period last year. Operating income excluding stock compensation expense, plant consolidation cost, and disposal of fixed assets increased 27.4% to $26.8 million for the six months ended September 30, 2006 compared to $21.0 million for the comparable adjusted period last year. Operating income as a percentage of sales excluding these charges was 18.0% for the first six months of fiscal 2007 compared to 16.0% for the same adjusted period last year.
Interest expense, net for the six month period ended September 30, 2006 was $3.4 million, a decrease of $6.2 million, from $9.6 million for the same period last year.
Net income for the six month period ended September 30, 2006 was $12.4 million compared to net income of $1.4 million for the same period last year. Net income excluding the after tax impact of stock option compensation expense, plant consolidation cost, disposal of fixed assets and loss on early extinguishment of debt increased 102.5% to $15.2 million for the first six months of fiscal 2007 compared to $7.5 million for the same adjusted period last year.
All Power Acquisition
During the quarter, RBC Bearings Incorporated acquired the stock of All Power Manufacturing Co. for approximately $9.9 million. The purchase price included approximately $8.8 million in cash, an $0.7 million note payable, and $0.4 million in transaction expenses. All Power manufactures a line of bearings and precision parts for use in commercial and military aerospace applications and general industrial applications. In calendar year 2005, All Power generated revenues of approximately $12.2 million. All Power contributed to RBC's results for the month of September and its results are reported as part of the Company's Plain Bearings segment.
Outlook
"The first half of fiscal 2007 was strong and our products continue to be exceptionally well accepted in expanding markets. We are well positioned to execute a record second half. New product and account initiatives continue to drive our revenues and we expect that the current agenda of efficiency projects as well as the completion of our restructuring activities for the class 8 truck lines will continue to expand our gross margins over the long term," concluded Dr. Hartnett.
Based on current market conditions, the Company expects financial performance in its third quarter of fiscal 2007 to be as follows:
-- Net sales in the range of $72.0 - $75.0 million
-- Operating income in the range of $12.0 - $13.0 million
Live Webcast
RBC Bearings Incorporated will host a webcast at 10:30 a.m. ET today to discuss the quarterly 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 800-798-2884 (international callers dial 617-614-6207) and enter conference call ID # 40990385. An audio replay of the call will be available from 12:30 p.m. ET on Friday, November 3 until 11:59 p.m. ET on Friday, November 17. The replay can be accessed by dialing 888-286-8010 (international callers dial 617-801-6888) and entering conference call ID # 60720191.
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 1,800 people and operates 16 manufacturing facilities in three 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 on June 16, 2006. The Company does not intend, and undertakes no obligation, to update or alter any forward-looking statement.
RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------------- ------------------------
September October September October
30, 2006 1, 2005 30, 2006 1, 2005
------------ ------------ ------------ -----------
Net sales $ 73,248 $ 65,367 $ 148,479 $ 131,368
Cost of sales 49,745 45,380 101,467 92,105
------------ ------------ ------------ -----------
Gross margin 23,503 19,987 47,012 39,263
Operating expenses:
Selling, general
and
administrative 10,610 14,628 20,237 23,122
Other, net 283 266 667 650
------------ ------------ ------------ -----------
Total operating
expenses 10,893 14,894 20,904 23,772
Operating income 12,610 5,093 26,108 15,491
Interest expense,
net 1,203 4,475 3,365 9,604
Loss on early
extinguishment of
debt - 3,771 3,576 3,771
------------ ------------ ------------ -----------
Income (loss)
before income
taxes 11,407 (3,153) 19,167 2,116
Provision for
(benefit from)
income taxes 4,029 (1,193) 6,765 731
------------ ------------ ------------ -----------
Net income
(loss) 7,378 (1,960) 12,402 1,385
Preferred stock
dividends - (294) - (893)
Participation rights
of preferred stock
in undistributed
earnings - - - (630)
------------ ------------ ------------ -----------
Net income (loss)
available to
common
stockholders $ 7,378 $ (2,254) $ 12,402 $ (138)
============ ============ ============ ===========
Net income (loss)
per common share:
Basic $ 0.36 $ (0.18) $ 0.61 $ (0.01)
Diluted $ 0.35 $ (0.18) $ 0.59 $ (0.01)
Weighted average
common shares:
Basic 20,502,251 12,197,773 20,295,367 9,200,270
Diluted 21,280,571 12,197,773 21,096,895 9,200,270
Reconciliation of Reported Operating Income to Adjusted Operating
Income:
Three Months Ended Six Months Ended
------------------------- -------------------------
September October September October
30, 2006 1, 2005 30, 2006 1, 2005
------------ ------------ ------------ ------------
Reported operating
income $ 12,610 $ 5,093 $ 26,108 $ 15,491
Stock options
compensation
expense 252 60 252 142
Non-recurring
compensation
expense - 5,200 - 5,200
Management
service fees - 61 - 173
Nice facility
consolidation
expense 82 - 315 -
Disposal of
fixed assets 83 30 116 30
------------ ------------ ------------ ------------
Adjusted operating
income $ 13,027 $ 10,444 $ 26,791 $ 21,036
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 Six Months Ended
------------------------- -------------------------
September October September October
30, 2006 1, 2005 30, 2006 1, 2005
------------ ------------ ------------ ------------
Reported net income
(loss) $ 7,378 $ (1,960) $ 12,402 $ 1,385
Stock options
compensation
expense (1) 163 37 163 93
Non-recurring
compensation
expense (1) - 3,234 - 3,406
Management
service fees
(1) - 38 - 113
Nice facility
consolidation
expense 53 - 204 -
Disposal of
fixed assets
(1) 54 19 75 20
Loss on early
extinguishment
of debt (1) - 2,346 2,315 2,470
------------ ------------ ------------ ------------
Adjusted net income$ 7,648 $ 3,714 $ 15,159 $ 7,487
(1) Item was tax
effected at the
effective tax
rate.
Preferred stock
dividends - (294) - (893)
Participation
rights of
preferred stock in
undistributed
earnings - - - (630)
------------ ------------ ------------ ------------
Adjusted net income
available to
common
stockholders $ 7,648 $ 3,420 $ 15,159 $ 5,964
============ ============ ============ ============
Adjusted net income
per common share:
Basic $ 0.37 $ 0.28 $ 0.75 $ 0.65
Diluted $ 0.36 $ 0.23 $ 0.72 $ 0.48
Adjusted weighted
average common
shares:
Basic 20,502,251 12,197,773 20,295,367 9,200,270
Diluted 21,280,571 14,962,964 21,096,895 12,452,744
Segment Data, Net External Sales:
Three Months Ended Six Months Ended
------------------ -------------------
September October September October
30,2006 1, 2005 30, 2006 1, 2005
--------- -------- --------- ---------
Roller bearing segment $23,356 $23,396 $ 47,597 $ 47,820
Plain bearing segment 33,055 27,132 67,084 53,577
Ball bearing segment 12,178 11,208 24,340 21,824
Other segment 4,659 3,631 9,458 8,147
--------- -------- --------- ---------
$73,248 $65,367 $148,479 $131,368
========= ======== ========= =========
Selected Financial Data:
Three Months Ended Six Months Ended
------------------ -------------------
September October September October
30, 2006 1, 2005 30, 2006 1, 2005
--------- -------- --------- ---------
Depreciation and amortization $ 2,545 $ 2,293 $ 4,948 $ 4,781
Cash (used in) provided by
operating activities $14,502 $(1,929) $ 27,411 $ 3,268
Capital expenditures $ 1,972 $ 3,229 $ 4,583 $ 5,859
Total debt $ 86,605 $171,488
Cash on hand $ 7,930 $ 4,521
Total debt minus cash on hand $ 78,675 $166,967
Backlog $174,985 $152,607
CONTACT: RBC Bearings
Daniel A. Bergeron, 203-267-5028
dbergeron@rbcbearings.com
or
Ashton Partners
Lauren Murphy, 617-275-8745
investors@rbcbearings.com
SOURCE: RBC Bearings Incorporated