RBC Bearings Incorporated Announces Fiscal 2024 First Quarter Results
First Quarter Financial Highlights
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First quarter net sales of
$387.1 million 9.3% over last year, Aerospace/Defense up21.2% and Industrial up4.7% . -
Gross margin of
43.4% in the first quarter of fiscal 2024 compared to39.9% for the same quarter last year. Up 400bps from adjusted gross margin for fiscal year 2022. -
First quarter net income as a percentage of net sales of
12.9% vs10.6% last year; Adjusted EBITDA as a percentage of net sales of31.1% vs28.4% last year. -
Free cash flow of
$55.1 million -
GAAP diluted EPS of
$1.52 $2.13
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(1) Results exclude items in reconciliation below. |
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“We are pleased with our first quarter results, as net sales increased
First Quarter Results
Net sales for the first quarter of fiscal 2024 were
SG&A for the first quarter of fiscal 2024 was
Other operating expenses for the first quarter of fiscal 2024 totaled
Operating income for the first quarter of fiscal 2024 was
Interest expense, net, was
Income tax expense for the first quarter of fiscal 2024 was
Net income for the first quarter of fiscal 2024 was
Diluted EPS attributable to common stockholders for the first quarter of fiscal 2024 was
Backlog as of July 1, 2023 was
Outlook for the Second Quarter Fiscal 2024
The Company expects net sales to be approximately
Live Webcast
RBC Bearings Incorporated will host a webcast on Friday, August 4th, 2023 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 # 13740255. An audio replay of the call will be available from 2:00 p.m. ET August 4th, 2023, until 2:00 p.m. ET August 18th, 2023. The replay can be accessed by dialing 877-660-6853 (international callers dial +1 201-612-7415) and providing conference ID # 13740255. 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
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 Attributable to Common Stockholders and Adjusted Earnings Per Share Attributable to Common Stockholders
Adjusted net income attributable to common stockholders and adjusted earnings per share attributable to common stockholders (calculated on a diluted basis) exclude non-cash expenses for amortization related to acquired intangible assets, stock-based 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
We use the term “Adjusted EBITDA” 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
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, 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 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. 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 | ||||||||
| July 1, | July 2, | |||||||
|
2023 |
|
|
2022 |
|
|||
| Net sales | $ |
387,122 |
|
$ |
354,080 |
|
||
| Cost of sales |
|
219,271 |
|
|
212,928 |
|
||
| Gross margin |
|
167,851 |
|
|
141,152 |
|
||
| Operating expenses: | ||||||||
| Selling, general and administrative |
|
64,673 |
|
|
55,828 |
|
||
| Other, net |
|
18,164 |
|
|
20,854 |
|
||
| Total operating expenses |
|
82,837 |
|
|
76,682 |
|
||
| Operating income |
|
85,014 |
|
|
64,470 |
|
||
| Interest expense, net |
|
20,474 |
|
|
15,799 |
|
||
| Other non-operating expense |
|
527 |
|
|
767 |
|
||
| Income before income taxes |
|
64,013 |
|
|
47,904 |
|
||
| Provision for income taxes |
|
13,986 |
|
|
10,466 |
|
||
| Net income |
|
50,027 |
|
|
37,438 |
|
||
| Preferred stock dividends |
|
5,750 |
|
|
5,750 |
|
||
| Net income attributable to common stockholders | $ |
44,277 |
|
$ |
31,688 |
|
||
| Net income per common share attributable to common stockholders: | ||||||||
| Basic | $ |
1.53 |
|
$ |
1.11 |
|
||
| Diluted | $ |
1.52 |
|
$ |
1.09 |
|
||
| Weighted average common shares: | ||||||||
| Basic |
|
28,846,874 |
|
|
28,670,488 |
|
||
| Diluted |
|
29,114,819 |
|
|
28,944,955 |
|
||
| Three Months Ended | ||||||||
| Reconciliation of Reported Operating Income to | July 1, | July 2, | ||||||
| Adjusted Operating Income: |
|
2023 |
|
|
2022 |
|
||
| Reported operating income | $ |
85,014 |
|
$ |
64,470 |
|
||
| Transaction and related costs |
|
- |
|
|
82 |
|
||
| Transition services |
|
- |
|
|
3,705 |
|
||
| Restructuring and consolidation |
|
290 |
|
|
- |
|
||
| Adjusted operating income | $ |
85,304 |
|
$ |
68,257 |
|
||
| Three Months Ended | ||||||||
| Reconciliation of Reported Net Income to Adjusted Net | July 1, | July 2, | ||||||
| Income Attributable to Common Stockholders: |
|
2023 |
|
|
2022 |
|
||
| Reported net income | $ |
50,027 |
|
$ |
37,438 |
|
||
| Transaction and related costs |
|
- |
|
|
82 |
|
||
| Transition services |
|
- |
|
|
3,705 |
|
||
| Restructuring and consolidation |
|
290 |
|
|
- |
|
||
| Foreign exchange translation loss/(gain) |
|
- |
|
|
(163 |
) |
||
| M&A related amortization |
|
16,258 |
|
|
16,411 |
|
||
| Stock compensation expense |
|
5,404 |
|
|
3,819 |
|
||
| Amortization of deferred finance fees |
|
856 |
|
|
2,298 |
|
||
| Tax impact of adjustments and other tax matters |
|
(5,140 |
) |
|
(6,038 |
) |
||
| Adjusted net income | $ |
67,695 |
|
$ |
57,552 |
|
||
| Preferred stock dividends |
|
5,750 |
|
|
5,750 |
|
||
| Adjusted net income attributable to common stockholders | $ |
61,945 |
|
$ |
51,802 |
|
||
| Adjusted net income per common share attributable | ||||||||
| to common stockholders: | ||||||||
| Basic | $ |
2.15 |
|
$ |
1.81 |
|
||
| Diluted | $ |
2.13 |
|
$ |
1.79 |
|
||
| Weighted average common shares: | ||||||||
| Basic |
|
28,846,874 |
|
|
28,670,488 |
|
||
| Diluted |
|
29,114,819 |
|
|
28,944,955 |
|
||
| Three Months Ended | ||||||||
| Reconciliation of Reported Net Income to | July 1, | July 2, | ||||||
| Adjusted EBITDA: |
|
2023 |
|
|
2022 |
|
||
| Reported net income | $ |
50,027 |
|
$ |
37,438 |
|
||
| Interest expense, net |
|
20,474 |
|
|
15,799 |
|
||
| Provision for income taxes |
|
13,986 |
|
|
10,466 |
|
||
| Stock compensation expense |
|
5,404 |
|
|
3,819 |
|
||
| Depreciation and amortization |
|
29,674 |
|
|
28,642 |
|
||
| Other non-operating expense |
|
527 |
|
|
767 |
|
||
| Transaction and related costs |
|
- |
|
|
82 |
|
||
| Transition services |
|
- |
|
|
3,705 |
|
||
| Restructuring and consolidation |
|
290 |
|
|
- |
|
||
| Adjusted EBITDA | $ |
120,382 |
|
$ |
100,718 |
|
||
| Three Months Ended | ||||||||
| July 1, | July 2, | |||||||
| Selected Financial Data: |
|
2023 |
|
|
2022 |
|
||
| Cash provided by operating activities | $ |
61,798 |
|
$ |
59,035 |
|
||
| Capital expenditures | $ |
6,702 |
|
$ |
7,857 |
|
||
| Total debt | $ |
1,344,885 |
|
$ |
1,565,330 |
|
||
| Cash and cash equivalents | $ |
56,744 |
|
$ |
119,587 |
|
||
| Total debt minus cash and cash equivalents | $ |
1,288,141 |
|
$ |
1,445,743 |
|
||
| Repurchase of common stock | $ |
6,782 |
|
$ |
5,984 |
|
||
| Backlog | $ |
641,124 |
|
$ |
635,741 |
|
||
| Three Months Ended | ||||||||
| July 1, | July 2, | |||||||
| Segment Data, Net External Sales: |
|
2023 |
|
|
2022 |
|
||
| Aerospace and defense segment | $ |
120,472 |
|
$ |
99,399 |
|
||
| Industrial segment |
|
266,650 |
|
|
254,681 |
|
||
| Total net external sales | $ |
387,122 |
|
$ |
354,080 |
|
||
| FY2024 Q2 Outlook - Modeling Items: | ||||||||
| Net sales | ||||||||
| Gross margin (as a percentage of net sales) | ||||||||
| SG&A (as a percentage of net sales) | ||||||||
| Interest expense, net | ||||||||
| Preferred stock dividends |
|
|
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View source version on businesswire.com: https://www.businesswire.com/news/home/20230804420575/en/
RBC Bearings
Robert Sullivan
203-267-5014
Rsullivan@rbcbearings.com
Alpha IR Group
Michael Cummings
617-461-1101
investors@rbcbearings.com
Source: RBC Bearings Incorporated
