RBC Bearings Sees 30-Percent Sales Increase In 2Q

OXFORD, Conn. -- 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 ended October 2, 2010. Our second quarter results reflect continued improvements in our markets and demonstrate the strength of our operations and the leverage built into our cost base," said Dr.

OXFORD, Conn. -- 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 ended October 2, 2010.

Our second quarter results reflect continued improvements in our markets and demonstrate the strength of our operations and the leverage built into our cost base," said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. "We delivered significant margin expansion on an adjusted basis, improving gross margins by 210 basis points and operating margins by 420 basis points, while further strengthening our balance sheet to afford ourselves the flexibility to participate most effectively in the recovery. We are particularly encouraged by the continued strength of various industrial segments, including the OEM and distribution markets, and we remain optimistic for continued revenue gains through fiscal 2011."

Second Quarter Results

Net sales for the second quarter of fiscal 2011 were $83.1 million, an increase of 30.5% from $63.7 million in the second quarter of fiscal 2010. The increase of 30.5% was driven by an increase of 85.3% in our industrial business offset by a 2.7% decrease in net sales in our aerospace and defense business. Gross margin for the second quarter was $27.2 million compared to $19.1 million for the same period last year. Gross margin as a percentage of net sales was 32.8% in the second quarter of fiscal 2011 compared to 30.0% for the same period last year. The increase in gross margin percentage was mainly driven by the current recovery in our industrial business offset by costs associated with our expansion into large bearing products. Gross margin as a percentage of net sales, excluding $0.6 million of large bearing expansion costs, was 33.5% compared to 31.4% for the same adjusted period last year.

Operating income increased 91.9% to $13.9 million for the second quarter of fiscal 2011 compared to $7.2 million for the same period last year. As a percentage of net sales, operating income was 16.7% compared to 11.4% for the same period last year. Operating income excluding costs associated with the expansion into new large bearing products and restructuring and moving costs was $14.6 million, an increase of 71.9% compared to adjusted operating income for the same period last year. As a percentage of net sales, operating income, excluding these charges, was 17.5% compared to 13.3% for the same adjusted period last year.

Interest expense, net for the second quarter of fiscal 2011 was $0.4 million compared to $0.5 million for the same period last year.

Other non-operating expense was $0.4 million for the second quarter of fiscal 2011. This was mainly comprised of foreign exchange losses.

For the second quarter of fiscal 2011, the Company reported net income of $8.6 million compared to net income of $4.4 million in the same period last year. Excluding the after-tax costs associated with the expansion into large bearing products, restructuring and moving costs, and the foreign exchange loss, net income increased 75.5% to $9.3 million compared to $5.3 million for the same adjusted period last year.

Six Month Results

Net sales for the six month period ended October 2, 2010 were $165.5 million, an increase of 29.9% from $127.4 million for the six month period ended September 26, 2009. Gross margin for the six month period ended October 2, 2010 was $53.5 million compared to $39.0 million for the same period last year. Gross margin as a percentage of net sales was 32.3% for the six month period of fiscal 2011 compared to 30.6% for the same period last year. The increase in gross margin percentage was mainly driven by the current recovery in our industrial business offset by costs associated with the Company's expansion into large bearing products. Gross margin as a percentage of net sales, excluding $1.5 million of large bearing costs, was 33.2% compared to 31.7% for the same adjusted period last year.

For the six month period ended October 2, 2010, the Company reported operating income of $27.9 million compared to $15.0 million for the same period last year. Operating income excluding costs associated with the expansion into large bearing products, restructuring and moving costs, and a net gain on disposition or sale of assets was $28.5 million for the six month period ended October 2, 2010 compared to $17.0 million for the same adjusted period last year. Operating income as a percentage of net sales excluding these charges was 17.2% for the six month period ended October 2, 2010 compared to 13.3% for the same adjusted period last year.

Interest expense, net for the six month period ended October 2, 2010 was $0.8 million, a decrease of $0.1 million, from $0.9 million for the same period last year.

Other non-operating expense was a loss of $0.8 million for the six month period ended October 2, 2010. This was mainly comprised of foreign exchange losses.

Net income for the six month period ended October 2, 2010 was $17.6 million compared to net income of $9.5 million for the same period last year. Excluding the after-tax costs associated with the expansion into large bearing products, restructuring and moving costs, the foreign exchange loss, and a net gain on disposition or sale of assets, net income was $18.5 million compared to $10.6 million for the same adjusted period last year.

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