RBC Bearings Incorporated (NYSE: RBC, RBCP), a leading
international manufacturer of highly engineered precision bearings,
components and essential systems for the industrial, defense and
aerospace industries, today reported results for the third quarter
of fiscal 2023.
Key Highlights
- Third quarter net sales of $351.6 million increased 31.7% over
last year; organic net sales up 12.7%.
- Industrial segment third quarter organic net sales up 11.8%
year over year and Aerospace/Defense segment third quarter net
sales up 13.2%.
- Third quarter net income as a percentage of net sales of 10.3%
vs 0.2% last year; adjusted EBITDA as a percentage of net sales of
29.4% vs 26.7% last year.
- Term loan principal reduction of $60.0 million in the third
quarter; $350.0 million from November 2021 to January 2023.
Third Quarter Financial
Highlights
($ in millions)
Fiscal 2023
Fiscal 2022
Change
GAAP
Adjusted (1)
GAAP
Adjusted (1)
GAAP
Adjusted (1)
Net sales
$
351.6
$
267.0
31.7
%
Gross margin
$
146.0
$
146.0
$
93.3
$
100.3
56.5
%
45.6
%
Gross margin %
41.5
%
41.5
%
35.0
%
37.6
%
Operating income
$
70.4
$
71.6
$
15.9
$
46.3
343.7
%
54.7
%
Operating income %
20.0
%
20.4
%
5.9
%
17.3
%
Net income
$
36.3
$
53.3
$
0.5
$
40.6
6,541.8
%
31.6
%
Net income/(loss) attributable to common
stockholders
$
30.6
$
47.7
$
(5.2
)
$
34.8
687.5
%
37.0
%
Diluted EPS
$
1.05
$
1.64
$
(0.18
)
$
1.20
683.3
%
36.7
%
(1) Results exclude items in
reconciliation below.
Nine Month Financial
Highlights
($ in millions)
Fiscal 2023
Fiscal 2022
Change
GAAP
Adjusted (1)
GAAP
Adjusted (1)
GAAP
Adjusted (1)
Net sales
$
1,074.9
$
584.1
84.0
%
Gross margin
$
438.3
$
438.3
$
219.6
$
227.5
99.6
%
92.7
%
Gross margin %
40.8
%
40.8
%
37.6
%
38.9
%
Operating income
$
206.9
$
215.9
$
61.8
$
96.2
235.0
%
124.5
%
Operating income %
19.2
%
20.1
%
10.6
%
16.5
%
Net income
$
117.5
$
172.8
$
23.2
$
102.0
405.8
%
69.4
%
Net income attributable to common
stockholders
$
100.3
$
155.6
$
17.0
$
95.8
491.1
%
62.5
%
Diluted EPS
$
3.45
$
5.36
$
0.63
$
3.58
447.6
%
49.7
%
(1) Results exclude items in
reconciliation below.
“We are pleased with our top- and bottom-line results during the
third quarter and our overall performance throughout the fiscal
year,” said Dr. Michael J. Hartnett, Chairman and Chief Executive
Officer. “Net sales were in line with our expectations, and we
continued to experience strong year-over-year revenue growth in
both our Industrial and Aerospace/Defense sectors. For the
remainder of the fiscal year, we remain confident in our ability to
continue to navigate dynamic economic challenges and deliver
sustainable growth.”
Third Quarter Results
Net sales for the third quarter of fiscal 2023 were $351.6
million, an increase of 31.7% from $267.0 million in the third
quarter of fiscal 2022. Excluding Dodge, organic net sales
increased 12.7% year over year. Net sales for our Industrial
segment increased 41.6%, while net sales for our Aerospace/Defense
segment increased 13.2%. Gross margin for the third quarter of
fiscal 2023 was $146.0 million compared to $93.3 million for the
same period last year.
SG&A for the third quarter of fiscal 2023 was $56.8 million,
an increase of $15.1 million from $41.7 million for the same period
last year. As a percentage of net sales, SG&A was 16.1% for the
third quarter of fiscal 2023 compared to 15.6% for the same period
last year.
Other operating expenses for the third quarter of fiscal 2023
totaled $18.9 million compared to $35.8 million for the same period
last year. For the third quarter of fiscal 2023, other operating
expenses included $17.4 million of amortization of intangible
assets, $1.2 million of Dodge TSA costs and other costs associated
with the Dodge acquisition, and $0.3 million of other items. For
the third quarter of fiscal 2022, other operating expenses included
$23.5 million of costs associated with the Dodge acquisition, $12.1
million of amortization of intangible assets, and $0.2 million of
other items.
Operating income for the third quarter of fiscal 2023 was $70.4
million compared to $15.9 million for the same period last year.
Excluding approximately $1.2 million of acquisition-related costs,
adjusted operating income for the third quarter of fiscal 2023 was
$71.6 million; excluding $30.4 million of acquisition costs,
adjusted operating income for the third quarter of fiscal 2022 was
$46.3 million. Adjusted operating income as a percentage of net
sales was 20.4% for the third quarter of fiscal 2023 compared to
17.3% for the same period last year.
Interest expense, net, was $20.9 million for the third quarter
of fiscal 2023 compared to $11.9 million for the same period last
year.
Income tax expense for the third quarter of fiscal 2023 was
$11.7 million compared to $2.1 million for the same period last
year. The effective income tax rate for the third quarter of fiscal
2023 was 24.4% compared to 79.2% for the same period last year. The
fiscal 2023 third quarter income tax expense included $0.3 million
of tax benefits from stock-based compensation offset by $0.2
million of other items. Income tax expense for the third quarter of
fiscal 2022 included $0.5 million of tax benefits from stock-based
compensation offset by $0.1 million of other items. The tax rate
for the third quarter of fiscal 2022 was negatively impacted by the
inclusion of certain pre-tax acquisition-related charges that are
not deductible for tax purposes.
Net income for the third quarter of fiscal 2023 was $36.3
million compared to $0.5 million for the same period last year. On
an adjusted basis, net income was $53.3 million for the third
quarter of fiscal 2023 compared to $40.6 million for the same
period last year. Net income attributable to common stockholders
for the third quarter of fiscal 2023 was $30.6 million compared to
a net loss of $5.2 million for the same period last year. On an
adjusted basis, net income attributable to common stockholders for
the third quarter of fiscal 2023 was $47.7 million compared to
$34.8 million for the same period last year.
Diluted EPS for the third quarter of fiscal 2023 was $1.05
compared to a loss of $0.18 for the same period last year. On an
adjusted basis, diluted EPS was $1.64 for the third quarter of
fiscal 2023 compared to $1.20 for the same period last year.
Backlog as of December 31, 2022 was $613.6 million compared to
$552.7 million as of January 1, 2022 and $653.2 million as of
October 1, 2022.
Outlook for the Fourth Quarter Fiscal
2023
The Company expects net sales to be approximately $375.0 million
to $385.0 million in the fourth quarter of fiscal 2023, compared to
$358.9 million last year, a growth rate of 4.5% to 7.3%.
Live Webcast
RBC Bearings Incorporated will host a webcast on Friday,
February 10th 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 877-407-4019 (international callers dial +1
201-689-8337) and provide conference ID # 13735439. An audio replay
of the call will be available from 2:00 p.m. ET February 10th,
2023, until 2:00 p.m. ET February 24th, 2023. The replay can be
accessed by dialing 877-660-6853 (international callers dial +1
201-612-7415) and providing conference ID # 13735439. 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.
Adjusted Operating Income
Adjusted operating income excludes acquisition expenses
including the impact of acquisition-related fair value adjustments
in connection with purchase, restructuring and other similar
charges, gains or losses on extinguishment of debt, and other
non-operational, non-cash or non-recurring losses. We believe that
adjusted operating income is useful in assessing our financial
performance by excluding items that are not indicative of our core
operating performance or that may obscure trends useful in
evaluating our continuing results of operations.
Adjusted Net Income and Adjusted Earnings Per Share
Adjusted net income and adjusted earnings per share (calculated
on a diluted basis) exclude non-cash expenses for amortization
related to acquired intangible assets, stock compensation,
amortization of deferred finance fees, acquisition expenses
including the impact of acquisition-related fair value adjustments
in connection with purchase, restructuring and other similar
charges, gains or losses on divestitures, discontinued operations,
gains or losses on extinguishment of debt, and other
non-operational, non-cash or non-recurring losses, net of their
income tax impact. We believe that adjusted net income and adjusted
earnings per share are useful in assessing our financial
performance by excluding items that are not indicative of our core
operating performance or that may obscure trends useful in
evaluating our continuing results of operations.
Adjusted EBITDA
Adjusted EBITDA is the term we use to describe net income
adjusted for the items summarized in the “Reconciliation of GAAP to
Non-GAAP Financial Measures” table below. Adjusted EBITDA is
intended to show our unleveraged, pre-tax operating results and
therefore reflects our financial performance based on operational
factors, excluding non-operational, non-cash or non-recurring
losses or gains. In view of our debt level, it is also provided to
aid investors in understanding our compliance with our debt
covenants. Management and various investors use the ratio of total
debt less cash to Adjusted EBITDA, or "net debt leverage," as a
measure of our financial strength and ability to incur incremental
indebtedness when making investment decisions and evaluating us
against peers. Lastly, management and various investors use the
ratio of the change in Adjusted EBITDA divided by the change in net
sales (referred to as “incremental margin” in the case of an
increase in net sales or “decremental margin” in the case of a
decrease in net sales) as an additional measure of our financial
performance and utilize it when making investment decisions and
evaluating us against peers.
Adjusted EBITDA is not a presentation made in accordance with
GAAP, and our definition of Adjusted EBITDA may vary from the
definition used by others in our industry. Adjusted EBITDA should
not be considered as an alternative to net income, income from
operations, or any other performance measures derived in accordance
with GAAP. Adjusted EBITDA has important limitations as an
analytical tool, and you should not consider it in isolation, or as
a substitute for analysis of our results as reported under GAAP.
For example, Adjusted EBITDA does not reflect: (a) our capital
expenditures, future requirements for capital expenditures or
contractual commitments; (b) changes in, or cash requirements for,
our working capital needs; (c) the significant interest expenses,
or the cash requirements necessary to service interest or principal
payments, on our debt; (d) tax payments that represent a reduction
in cash available to us; (e) any cash requirements for the assets
being depreciated and amortized that may have to be replaced in the
future; or (f) the impact of earnings or charges resulting from
matters that we and the lenders under our credit agreement may not
consider indicative of our ongoing operations. In particular, our
definition of Adjusted EBITDA adds back certain non-cash,
non-operating or non-recurring charges that are deducted in
calculating net income, even though these are expenses that may
recur or vary greatly, are difficult to predict, and can represent
the effect of long-term strategies as opposed to short-term
results. In addition, certain of these expenses can represent the
reduction of cash that could be used for other corporate purposes.
Further, although not included in the calculation of Adjusted
EBITDA below, the measure may at times (i) include estimated cost
savings and operating synergies related to operational changes
ranging from acquisitions to dispositions to restructurings and/or
(ii) exclude one-time transition expenditures that we anticipate we
will need to incur to realize cost savings before such savings have
occurred.
About RBC Bearings
RBC Bearings Incorporated is an international manufacturer and
marketer of highly engineered precision bearings, components and
essential systems. 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/defense and industrial market
activity, future financial performance, our debt level, the
integration of the Dodge acquisition, 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, our ability to meet our debt obligations, the Company’s
ability to acquire and integrate complementary businesses, and
risks and uncertainties listed or disclosed in the our 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/A. 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
Nine Months Ended
December 31,
January 1,
December 31,
January 1,
2022
2022
2022
2022
Net sales
$
351,625
$
266,953
$
1,074,872
$
584,058
Cost of sales
205,585
173,608
636,533
364,476
Gross margin
146,040
93,345
438,339
219,582
Operating expenses: Selling, general and administrative
56,782
41,702
170,129
113,137
Other, net
18,866
35,778
61,331
44,693
Total operating expenses
75,648
77,480
231,460
157,830
Operating income
70,392
15,865
206,879
61,752
Interest expense, net
20,901
11,848
55,032
27,937
Other non-operating expense
1,539
1,395
2,490
639
Income before income taxes
47,952
2,622
149,357
33,176
Provision for income taxes
11,688
2,076
31,853
9,944
Net income
36,264
546
117,504
23,232
Preferred stock dividends
5,686
5,751
17,186
6,261
Net income/(loss) attributable to common stockholders
$
30,578
$
(5,205
)
$
100,318
$
16,971
Net income/(loss) per share attributable to common
stockholders: Basic
$
1.06
$
(0.18
)
$
3.49
$
0.64
Diluted
$
1.05
$
(0.18
)
$
3.45
$
0.63
Weighted average common shares: Basic
28,805,305
28,618,495
28,744,732
26,379,984
Diluted
29,120,318
28,618,495
29,053,608
26,757,811
Three Months Ended
Nine Months Ended
Reconciliation of Reported Gross Margin to
December 31,
January 1,
December 31,
January 1,
Adjusted Gross Margin:
2022
2022
2022
2022
Reported gross margin
$
146,040
$
93,345
$
438,339
$
219,582
Inventory step-up
-
6,977
-
6,977
Restructuring and consolidation
-
-
-
929
Adjusted gross margin
$
146,040
$
100,322
$
438,339
$
227,488
Three Months Ended
Nine Months Ended
Reconciliation of Reported Operating Income to
December 31,
January 1,
December 31,
January 1,
Adjusted Operating Income:
2022
2022
2022
2022
Reported operating income
$
70,392
$
15,865
$
206,879
$
61,752
Inventory step-up
-
6,977
-
6,977
Transaction and related costs
6
20,141
73
21,574
Transition services
1,241
3,325
8,945
3,325
Restructuring and consolidation
-
-
17
2,544
Adjusted operating income
$
71,639
$
46,308
$
215,914
$
96,172
Reconciliation of Reported Net Income attributable to
Three Months Ended
Nine Months Ended
Common Stockholders to Adjusted Net Income Attributable
December 31,
January 1,
December 31,
January 1,
to Common Stockholders:
2022
2022
2022
2022
Reported net income
$
36,264
$
546
$
117,504
$
23,232
Inventory step-up
-
6,977
-
6,977
Transaction and related costs
6
22,217
73
39,120
Transition services
1,241
3,325
8,945
3,325
Restructuring and consolidation
-
-
17
2,544
Foreign exchange translation loss/(gain)
-
1
(417
)
93
M&A related amortization
16,276
11,464
48,832
15,599
Stock compensation expense
2,874
4,544
11,047
28,499
Amortization of deferred finance fees
1,826
773
6,164
985
Tax impact of adjustments and other tax matters
(5,141
)
(9,296
)
(19,362
)
(18,341
)
Adjusted net income
$
53,346
$
40,551
$
172,803
$
102,033
Preferred stock dividends
5,686
5,751
17,186
6,261
Adjusted net income attributable to common
stockholders
$
47,660
$
34,800
$
155,617
$
95,772
Adjusted net income per common share attributable to
common stockholders: Basic
$
1.65
$
1.22
$
5.41
$
3.63
Diluted
$
1.64
$
1.20
$
5.36
$
3.58
Weighted average common shares: Basic
28,805,305
28,618,495
28,744,732
26,379,984
Diluted
29,120,318
29,011,478
29,053,608
26,757,811
Three Months Ended
Nine Months Ended
Reconciliation of Reported Net Income to
December 31,
January 1,
December 31,
January 1,
Adjusted EBITDA:
2022
2022
2022
2022
Reported net income
$
36,264
$
546
$
117,504
$
23,232
Interest expense, net
20,901
11,848
55,032
27,937
Provision for income taxes
11,688
2,076
31,853
9,944
Stock compensation expense
2,874
4,544
11,047
28,499
Depreciation and amortization
28,743
20,498
85,811
37,355
Other non-operating expense
1,539
1,395
2,490
639
Inventory step-up
-
6,977
-
6,977
Transaction and related costs
6
20,141
73
21,574
Transition services
1,241
3,325
8,945
3,325
Restructuring and consolidation
-
-
17
2,544
Adjusted EBITDA
$
103,256
$
71,350
$
312,772
$
162,026
Three Months Ended
Nine Months Ended
December 31,
January 1,
December 31,
January 1,
Selected Financial Data:
2022
2022
2022
2022
Cash provided by operating activities
$
60,878
$
39,952
$
149,258
$
133,426
Capital expenditures
$
6,501
$
14,879
$
29,577
$
21,761
Total debt
$
1,464,078
$
1,790,253
Cash and marketable securities
$
82,036
$
255,503
Total debt minus cash and marketable securities
$
1,382,042
$
1,534,750
Repurchase of common stock
$
6,559
$
7,656
Backlog
$
613,582
$
552,712
Three Months Ended
Nine Months Ended
December 31,
January 1,
December 31,
January 1,
Segment Data, Net External Sales:
2022
2022
2022
2022
Aerospace and defense segment
$
105,532
$
93,203
$
308,479
$
276,483
Industrial segment
246,093
173,750
766,393
307,575
Total net external sales
$
351,625
$
266,953
$
1,074,872
$
584,058
FY2023 Q4 Outlook - Modeling Items: Net sales
$375,000-$385,000 Gross margin (as a percentage of net sales)
41.00%-42.00% SG&A (as a percentage of net sales) 15.25%-15.75%
Interest expense, net $21,000-$22,000 Preferred stock dividends
$
5,750
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230209005719/en/
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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