UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report: October 30, 2020 (Date
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 2 - Financial Information
Item 2.02. Results of Operations and Financial Condition.
On October 30, 2020, RBC Bearings Incorporated (the “Company”) issued a press release announcing its financial results for the quarter ended September 26, 2020 and certain other information. This press release has been furnished as Exhibit 99.1 to this report and is incorporated herein by this reference.
The information in this report, including the exhibit hereto, is furnished pursuant to Item 2.02 of Form 8-K, and is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. The information contained herein and in the accompanying exhibit is not incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit 99.1 | Press Release of RBC Bearings Incorporated dated October 30, 2020. |
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SIGNATURES
According to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Date: October 30, 2020
| RBC BEARINGS INCORPORATED | |||
| By: | /s/ John J. Feeney | ||
| Name: | John J. Feeney | ||
| Title: | Vice President, General Counsel & Secretary | ||
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Exhibit 99.1
Press release
RBC Bearings Incorporated Announces Fiscal 2021 Second Quarter Results
Oxford, CT – October 30, 2020 – RBC Bearings Incorporated (Nasdaq: ROLL), 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 2021.
Second Quarter Financial Highlights
| Fiscal 2021 | Fiscal 2020 | Change | ||||||||||||||||||||||
| ($ in millions) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | ||||||||||||||||||
| Net sales | $ | 146.3 | $ | 181.9 | -19.6 | % | ||||||||||||||||||
| Gross margin | $ | 56.6 | $ | 58.6 | $ | 71.1 | $ | 71.2 | -20.4 | % | -17.7 | % | ||||||||||||
| Gross margin % | 38.7 | % | 40.0 | % | 39.1 | % | 39.1 | % | ||||||||||||||||
| Operating income | $ | 26.4 | $ | 29.9 | $ | 37.3 | $ | 38.4 | -29.3 | % | -22.2 | % | ||||||||||||
| Operating income % | 18.0 | % | 20.4 | % | 20.5 | % | 21.1 | % | ||||||||||||||||
| Net income | $ | 20.4 | $ | 23.2 | $ | 31.3 | $ | 32.3 | -34.7 | % | -28.2 | % | ||||||||||||
| Diluted EPS | $ | 0.82 | $ | 0.93 | $ | 1.26 | $ | 1.30 | -34.9 | % | -28.5 | % | ||||||||||||
(1) Results exclude items in reconciliation below.
Six Month Financial Highlights
| Fiscal 2021 | Fiscal 2020 | Change | ||||||||||||||||||||||
| ($ in millions) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | ||||||||||||||||||
| Net sales | $ | 302.8 | $ | 364.6 | -16.9 | % | ||||||||||||||||||
| Gross margin | $ | 116.0 | $ | 118.0 | $ | 141.8 | $ | 141.9 | -18.2 | % | -16.8 | % | ||||||||||||
| Gross margin % | 38.3 | % | 39.0 | % | 38.9 | % | 38.9 | % | ||||||||||||||||
| Operating income | $ | 55.2 | $ | 59.8 | $ | 75.8 | $ | 76.9 | -27.2 | % | -22.2 | % | ||||||||||||
| Operating income % | 18.2 | % | 19.8 | % | 20.8 | % | 21.1 | % | ||||||||||||||||
| Net income | $ | 43.1 | $ | 46.8 | $ | 61.8 | $ | 62.9 | -30.2 | % | -25.5 | % | ||||||||||||
| Diluted EPS | $ | 1.73 | $ | 1.88 | $ | 2.49 | $ | 2.53 | -30.5 | % | -25.7 | % | ||||||||||||
(1) Results exclude items in reconciliation below.
“Our second quarter results showed strong profitability from our core products” said Michael J. Hartnett, Chairman and Chief Executive Officer. “Looking to the back half of the fiscal year, we remain committed to the preservation of our healthy balance sheet and taking great advantage of our resources to develop new products to address the emerging and urgent needs presented by both space and defense markets.”
Second Quarter Results
Net sales for the second quarter of fiscal 2021 were $146.3 million, a decrease of 19.6% from $181.9 million in the second quarter of fiscal 2020, and organic net sales decreased 19.8% year over year. Net sales for the aerospace markets decreased 25.8% while industrial market net sales declined 8.3% or 8.9% on an organic basis. Gross margin for the second quarter of fiscal 2021 was $56.6 million compared to $71.1 million for the same period last year. On an adjusted basis, gross margin for the second quarter of fiscal 2021 was $58.6 million compared to an adjusted $71.2 million for the same quarter last year.
SG&A for the second quarter of fiscal 2021 was $26.0 million, a decrease of $4.8 million from $30.8 million for the same period last year. The decrease was primarily due to lower personnel-related costs of $4.9 million offset by $0.1 million of other items. As a percentage of net sales, SG&A was 17.8% for the second quarter of fiscal 2021 compared to 16.9% for the same period last year.
Other operating expenses for the second quarter of fiscal 2021 totaled $4.2 million compared to $3.0 million for the same period last year. 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. For the second quarter of fiscal 2020, other operating expenses were comprised mainly of $2.3 million in amortization of intangible assets and $0.9 million of acquisition costs partially offset by $0.2 million of other income.
Operating income for the second quarter of fiscal 2021 was $26.4 million compared to $37.3 million for the same period last year. 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 compared to adjusted operating income of $38.4 million for the second quarter of fiscal 2020. Adjusted operating income as a percentage of net sales was 20.4% for the second quarter of fiscal 2021 compared to 21.1% for the same period last year.
Interest expense, net was $0.3 million for the second quarter of fiscal 2021 compared to $0.5 million for the same period last year.
Income tax expense for the second quarter of fiscal 2021 was $5.4 million compared to $5.4 million for the same period last year. The effective income tax rate for the second quarter of fiscal 2021 was 20.9% compared to 14.7% for the same period last year. The current quarter income tax expense included $0.4 million of tax benefits from share-based stock compensation compared to $2.5 million for the same period last year.
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Net income for the second quarter of fiscal 2021 was $20.4 million compared to $31.3 million for the same period last year. On an adjusted basis, net income was $23.2 million for the second quarter of fiscal 2021 compared to $32.3 million for the same period last year.
Diluted EPS for the second quarter of fiscal 2021 was $0.82 per share compared to $1.26 per share for the same period last year. On an adjusted basis, diluted EPS was $0.93 per share for the second quarter of fiscal 2021 compared to $1.30 per share for the same period last year.
Backlog as of September 26, 2020 was $403.0 million compared to $473.2 million as of September 28, 2019.
Restructuring and Consolidation
During the second quarter of fiscal 2021 the company consolidated two of its manufacturing facilities. This resulted in $2.6 million of non-cash restructuring charges comprised of $2.0 million of inventory rationalization charges within cost of sales and $0.6 million of other charges within other operating expenses. Other restructuring charges during the quarter included personnel-related costs of $0.5 million and $0.4 million of other non-cash items.
Liquidity
The Company ended the second quarter of fiscal 2021 with a strong cash balance and liquidity position. Cash as of September 26, 2020 was $166.4 million and the Company had approximately $259.5 million of undrawn revolving credit on its two bank facilities. The Company ended the quarter with total debt of $20.4 million and was in full compliance with all covenants under its credit agreements.
Outlook for the Third Quarter Fiscal 2021
The Company expects net sales to be approximately $140.0 million to $145.0 million in the third quarter of fiscal 2021, compared to $177.0 million last year.
Live Webcast
RBC Bearings Incorporated will host a webcast on Friday, October 30th 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 # 7558975. An audio replay of the call will be available from 1:45 p.m. ET October 30, 2020 until 1:45 p.m. ET November 6, 2020. The replay can be accessed by dialing 855-859-2056 (international callers dial 404-537-3406) and providing conference call ID # 7558975. 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.
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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, COVID-19 pandemic, 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, 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.
Contacts
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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RBC Bearings Incorporated
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 26, | September 28, | September 26, | September 28, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net sales | $ | 146,335 | $ | 181,909 | $ | 302,828 | $ | 364,599 | ||||||||
| Cost of sales | 89,739 | 110,795 | 186,779 | 222,791 | ||||||||||||
| Gross margin | 56,596 | 71,114 | 116,049 | 141,808 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 26,023 | 30,774 | 52,852 | 60,861 | ||||||||||||
| Other, net | 4,210 | 3,031 | 8,020 | 5,148 | ||||||||||||
| Total operating expenses | 30,233 | 33,805 | 60,872 | 66,009 | ||||||||||||
| Operating income | 26,363 | 37,309 | 55,177 | 75,799 | ||||||||||||
| Interest expense, net | 343 | 473 | 768 | 1,020 | ||||||||||||
| Other non-operating expense (income) | 211 | 195 | 253 | 364 | ||||||||||||
| Income before income taxes | 25,809 | 36,641 | 54,156 | 74,415 | ||||||||||||
| Provision for income taxes | 5,388 | 5,371 | 11,046 | 12,646 | ||||||||||||
| Net income | $ | 20,421 | $ | 31,270 | $ | 43,110 | $ | 61,769 | ||||||||
| Net income per common share: | ||||||||||||||||
| Basic | $ | 0.82 | $ | 1.27 | $ | 1.74 | $ | 2.52 | ||||||||
| Diluted | $ | 0.82 | $ | 1.26 | $ | 1.73 | $ | 2.49 | ||||||||
| Weighted average common shares: | ||||||||||||||||
| Basic | 24,823,658 | 24,584,369 | 24,793,245 | 24,543,038 | ||||||||||||
| Diluted | 24,957,158 | 24,905,173 | 24,944,608 | 24,856,561 | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| Reconciliation of Reported Gross Margin to | September 26, | September 28, | September 26, | September 28, | ||||||||||||
| Adjusted Gross Margin: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Reported gross margin | $ | 56,596 | $ | 71,114 | $ | 116,049 | $ | 141,808 | ||||||||
| Inventory purchase accounting adjustment | - | 84 | - | 84 | ||||||||||||
| Restructuring and consolidation | 1,994 | - | 1,994 | - | ||||||||||||
| Adjusted gross margin | $ | 58,590 | $ | 71,198 | $ | 118,043 | $ | 141,892 | ||||||||
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| Three Months Ended | Six Months Ended | |||||||||||||||
| Reconciliation of Reported Operating Income to | September 26, | September 28, | September 26, | September 28, | ||||||||||||
| Adjusted Operating Income: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Reported operating income | $ | 26,363 | $ | 37,309 | $ | 55,177 | $ | 75,799 | ||||||||
| Inventory purchase accounting adjustment | - | 84 | - | 84 | ||||||||||||
| Acquisition costs | - | 901 | - | 901 | ||||||||||||
| Restructuring and consolidation | 3,514 | 84 | 4,633 | 84 | ||||||||||||
| Adjusted operating income | $ | 29,877 | $ | 38,378 | $ | 59,810 | $ | 76,868 | ||||||||
| Reconciliation of Reported Net Income and Net Income | Three Months Ended | Six Months Ended | ||||||||||||||
| Per Common Share to Adjusted Net Income and | September 26, | September 28, | September 26, | September 28, | ||||||||||||
| Adjusted Net Income Per Common Share: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Reported net income | $ | 20,421 | $ | 31,270 | $ | 43,110 | $ | 61,769 | ||||||||
| Inventory purchase accounting adjustment (1) | - | 72 | - | 72 | ||||||||||||
| Acquisition costs (1) | - | 769 | - | 769 | ||||||||||||
| Restructuring and consolidation (1) | 2,780 | 72 | 3,676 | 72 | ||||||||||||
| Foreign exchange translation loss (1) | 115 | 65 | 176 | 348 | ||||||||||||
| Discrete and other tax items benefit | (102 | ) | 82 | (127 | ) | (151 | ) | |||||||||
| Adjusted net income | $ | 23,214 | $ | 32,330 | $ | 46,835 | $ | 62,879 | ||||||||
| (1) After tax impact. | ||||||||||||||||
| Adjusted net income per common share: | ||||||||||||||||
| Basic | $ | 0.94 | $ | 1.32 | $ | 1.89 | $ | 2.56 | ||||||||
| Diluted | $ | 0.93 | $ | 1.30 | $ | 1.88 | $ | 2.53 | ||||||||
| Weighted average common shares: | ||||||||||||||||
| Basic | 24,823,658 | 24,584,369 | 24,793,245 | 24,543,038 | ||||||||||||
| Diluted | 24,957,158 | 24,905,173 | 24,944,608 | 24,856,561 | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 26, | September 28, | September 26, | September 28, | |||||||||||||
| Segment Data, Net External Sales: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Plain bearings segment | $ | 71,053 | $ | 90,007 | $ | 149,928 | $ | 177,496 | ||||||||
| Roller bearings segment | 21,579 | 32,585 | 44,479 | 69,444 | ||||||||||||
| Ball bearings segment | 21,099 | 17,424 | 39,939 | 35,134 | ||||||||||||
| Engineered products segment | 32,604 | 41,893 | 68,482 | 82,525 | ||||||||||||
| $ | 146,335 | $ | 181,909 | $ | 302,828 | $ | 364,599 | |||||||||
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| Three Months Ended | Six Months Ended | |||||||||||||||
| September 26, | September 28, | September 26, | September 28, | |||||||||||||
| Selected Financial Data: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Depreciation and amortization | $ | 8,437 | $ | 7,802 | $ | 16,833 | $ | 15,322 | ||||||||
| Share-based stock compensation expense | 5,231 | 5,059 | 10,669 | 9,861 | ||||||||||||
| Adjusted operating income plus depreciation/amortization plus share-based stock compensation expense | $ | 43,545 | $ | 51,239 | $ | 87,312 | $ | 102,051 | ||||||||
| Cash provided by operating activities | $ | 26,120 | $ | 24,482 | $ | 74,479 | $ | 64,618 | ||||||||
| Capital expenditures | $ | 2,133 | $ | 8,176 | $ | 6,008 | $ | 20,216 | ||||||||
| Total debt | $ | 20,392 | $ | 37,777 | ||||||||||||
| Cash and short-term investments | $ | 166,352 | $ | 36,398 | ||||||||||||
| Repurchase of common stock | $ | 4,399 | $ | 9,848 | ||||||||||||
| Backlog | $ | 402,958 | $ | 473,233 | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 26, | September 28, | September 26, | September 28, | |||||||||||||
| Reconciliation of Total Net Sales to Organic Sales: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net sales | $ | 146,335 | $ | 181,909 | $ | 302,828 | $ | 364,599 | ||||||||
| Swiss Tool - acquisition | (433 | ) | - | (2,619 | ) | - | ||||||||||
| Organic net sales | $ | 145,902 | $ | 181,909 | $ | 300,209 | $ | 364,599 | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 26, | September 28, | September 26, | September 28, | |||||||||||||
| Reconciliation of Aerospace Net Sales to Organic Sales: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net sales | $ | 87,141 | $ | 117,384 | $ | 186,123 | $ | 233,703 | ||||||||
| Swiss Tool - acquisition | - | - | - | - | ||||||||||||
| Organic net sales | $ | 87,141 | $ | 117,384 | $ | 186,123 | $ | 233,703 | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 26, | September 28, | September 26, | September 28, | |||||||||||||
| Reconciliation of Industrial Net Sales to Organic Sales: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net sales | $ | 59,194 | $ | 64,525 | $ | 116,705 | $ | 130,896 | ||||||||
| Swiss Tool - acquisition | (433 | ) | - | (2,619 | ) | - | ||||||||||
| Organic net sales | $ | 58,761 | $ | 64,525 | $ | 114,086 | $ | 130,896 | ||||||||
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