Oxford, CT - RBC Bearings Incorporated, 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 of fiscal year 2014.
Second Quarter Highlights
| Fiscal 2014 | Fiscal 2013 | Change | ||||||||||||||||
| ($ in millions) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | ||||||||||||
| Net sales | $102.0 | $100.4 | 1.6% | |||||||||||||||
| Gross margin | $40.6 | $37.5 | 8.2% | |||||||||||||||
| Gross margin % | 39.8% | 37.4% | ||||||||||||||||
| Operating income | $21.5 | $22.8 | $21.2 | $21.2 | 1.5% | 7.6% | ||||||||||||
| Operating income % | 21.1% | 22.4% | 21.1% | 21.1% | ||||||||||||||
| Net income | $14.1 | $14.8 | $16.5 | $13.7 | -14.4% | 8.4% | ||||||||||||
| Diluted EPS | $0.61 | $0.64 | $0.73 | $0.60 | -16.4% | 6.7% | ||||||||||||
| (1) Results exclude items in reconciliation below. | ||||||||||||||||||
Six Month Highlights
| Fiscal 2014 | Fiscal 2013 | Change | ||||||||||||||||
| ($ in millions) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | ||||||||||||
| Net sales | $204.6 | $203.7 | 0.4% | |||||||||||||||
| Gross margin | $81.1 | $76.0 | 6.7% | |||||||||||||||
| Gross margin % | 39.6% | 37.3% | ||||||||||||||||
| Operating income | $43.8 | $45.7 | $43.2 | $43.2 | 1.4% | 5.9% | ||||||||||||
| Operating income % | 21.4% | 22.3% | 21.2% | 21.2% | ||||||||||||||
| Net income | $29.2 | $30.0 | $33.7 | $27.6 | -13.1% | 8.6% | ||||||||||||
| Diluted EPS | $1.26 | $1.29 | $1.49 | $1.22 | -15.4% | 5.7% | ||||||||||||
| (1) Results exclude items in reconciliation below. | ||||||||||||||||||
“Our second quarter results continue to reflect strong execution and increasing aerospace volumes,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “Additionally, we are encouraged to see the sequential strengthening and improved execution of our industrial business.”
Second Quarter Results
Net sales for the second quarter of fiscal 2014 were $102.0 million, an increase of 1.6% from $100.4 million in the second quarter of fiscal 2013. The increase in net sales was mainly the result of a 15.2% increase in aerospace and defense driven by commercial aircraft build rates, the aerospace aftermarket, and the inclusion of WPA. This was offset by a 12.8% decline in industrial sales driven by minimal activity in military vehicles, a decline in mining and construction activity on a year over year basis and the inclusion of CMP. Excluding military vehicles of $4.2 million, the decline in industrial sales would have been 4.7% mainly driven by the OEM business. Gross margin for the second quarter was $40.6 million compared to $37.5 million for the same period last year. Gross margin as a percentage of net sales was 39.8% in the second quarter of fiscal 2014 compared to 37.4% for the same period last year.
SG&A for the second quarter of fiscal 2014 was $17.1 million, an increase of $1.3 million over $15.8 million for the same period last year. The increase of $1.3 million was primarily attributable to an increase of $0.3 million in personnel-related expenses, $0.3 million in professional fees, $0.2 million in incentive stock compensation expenses, $0.1 million in other items, and $0.4 million associated with the addition of two acquisitions. As a percentage of net sales, SG&A was 16.8% for the second quarter of fiscal 2014 compared to 15.7% for the same period last year.
Other operating expenses for the second quarter of fiscal 2014 totaled $1.9 million, an increase of $1.3 million, compared to $0.6 million for the same period last year. For the second quarter of fiscal 2014 other operating expenses consisted of $0.4 million of amortization of intangibles, $0.9 million in costs associated with the consolidation and restructuring of large bearings facilities, $0.4 million of costs associated with acquisitions, and $0.2 million of other professional expenses. For the same period last year, other operating expenses consisted of $0.4 million of amortization of intangibles and $0.2 million of other items.
Operating income for the second quarter of fiscal 2014 was $21.5 million compared to operating income of $21.2 million for the same period last year. As a percentage of net sales, operating income was 21.1% compared to 21.1% for the same period last year. Excluding costs associated with the consolidation and restructuring of large bearing facilities, acquisition costs, and disposal of fixed assets, operating income would have been $22.8 million for the second quarter of fiscal 2014 compared to $21.2 million for the same period last year. Excluding these adjustments, operating income as a percentage of net sales would have been 22.4% compared to 21.1 % for the same period last year.
Interest expense, net for the second quarter of fiscal 2014 was $0.3 million compared to $0.2 million for the same period last year.
Income tax expense for the second quarter of fiscal 2014 was $7.2 million compared to $4.4 million for the same period last year. Our effective income tax rate for the second quarter of fiscal 2014 was 33.6% compared to 21.1% for the same period last year. The effective income tax rates for the second quarter of fiscal 2014 and 2013 include a $0.2 million and $2.8 million benefit due to the reversal of unrecognized tax benefits associated with the conclusion of state and federal income tax audits. The effective income tax rates without these discrete items would have been 34.4% and 34.7% for the second quarter of fiscal 2014 and 2013, respectively.
Net income for the second quarter of fiscal 2014 was $14.1 million compared to $16.5 million for the same period last year. Excluding the after tax impact of costs associated with consolidation and restructuring of large bearing facilities, acquisition costs, disposal of fixed assets, and the discrete tax benefits, net income would have been $14.8 million for the second quarter of fiscal 2014, compared to an adjusted net income of $13.7 million for the same period last year.
Diluted EPS for the second quarter of fiscal 2014 was 61 cents per share compared to 73 cents per share for the same period last year. Excluding the after tax impact of costs associated with consolidation and restructuring of large bearing facilities, acquisition costs, disposal of fixed assets and the discrete tax benefits, diluted EPS for the second quarter of fiscal 2014 would have been 64 cents per share compared to an adjusted diluted EPS of 60 cents per share for the same period last year, an increase of 6.7%.
Backlog, as of September 28, 2013, was $222.3 million compared to $216.1 million as of September 29, 2012.
Acquisitions
On October 7, 2013, the Company completed the acquisition of the net assets of Turbine Components Inc. (“TCI”) for approximately $3.9 million. TCI, located in San Diego, California, is an FAA certified aircraft gas turbine repair station and manufacturer of precision components for the aerospace markets.
On August 16, 2013, the Company completed the acquisition of Climax Metal Products Company (“CMP”) for approximately $13.6 million. CMP, located in Mentor, Ohio, is a manufacturer of precision shaft collars, rigid couplings, keyless locking devices, and bearings for the industrial markets.
