Oxford, CT - RBC Bearings Incorporated reported results for the fourth quarter of fiscal year 2014.
Fourth Quarter Highlights
| Fiscal 2014 | Fiscal 2013 | Change | |||||||||
($ in millions) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | ||||||
| Net sales | $113.7 | $103.0 | 10.4% | |||||||||
| Gross margin | $45.2 | $40.7 | 11.2% | |||||||||
| Gross margin % | 39.8% | 39.5% | ||||||||||
| Operating income | $25.2 | $15.8 | $22.7 | 59.8% | 11.1% | |||||||
| Operating income % | 22.1% | 15.3% | 22.0% | |||||||||
| Net income | $18.2 | $17.1 | $10.6 | $15.9 | 72.1% | 7.6% | ||||||
| Diluted EPS | $0.78 | $0.73 | $0.46 | $0.69 | 69.6% | 5.8% | ||||||
| (1) Results exclude items in reconciliation below. | ||||||||||||
Full Year Highlights
| Fiscal 2014 | Fiscal 2013 | Change | |||||||||
($ in millions) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | GAAP | Adjusted (1) | ||||||
| Net sales | $418.9 | $403.1 | 3.9% | |||||||||
| Gross margin | $164.8 | $152.9 | 7.8% | |||||||||
| Gross margin % | 39.3% | 37.9% | ||||||||||
| Operating income | $88.7 | $90.7 | $78.1 | $85.0 | 13.5% | 6.7% | ||||||
| Operating income % | 21.2% | 21.7% | 19.4% | 21.1% | ||||||||
| Net income | $60.2 | $59.9 | $56.3 | $55.5 | 6.9% | 7.9% | ||||||
| Diluted EPS | $2.59 | $2.58 | $2.47 | $2.43 | 4.9% | 6.2% | ||||||
| (1) Results exclude items in reconciliation below. | ||||||||||||
“Our fourth quarter and fiscal 2014 earnings marked all-time highs across several key metrics including net sales, gross margin, and net income,” said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. “These record results showed sustained year-over-year growth driven by strong execution, continued aerospace demand and improving industrial markets at the end of the fiscal year. We are also pleased to have recently announced a special dividend for our shareholders, reflective of our financial strength and continued confidence in the future for RBC Bearings.”
Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2014 were $113.7 million, an increase of 10.4% from $103.0 million in the fourth quarter of fiscal 2013. Aerospace and defense markets increased 12.9% driven by commercial aircraft build rates and the inclusion of two acquisitions, WPA and TCI. Our industrial sales increased 7.3% driven by energy, construction, and general industrial activity and the favorable impact of one acquisition, CMP. Excluding military vehicle sales of $1.6 million in fiscal 2013, the increase in industrial sales was 11.3%. Gross margin for the fourth quarter was $45.2 million compared to $40.7 million for the same period last year. Gross margin as a percentage of net sales was 39.8% in the fourth quarter of fiscal 2014 compared to 39.5% for the same period last year.
SG&A for the fourth quarter of fiscal 2014 was $19.6 million, an increase of $2.3 million over $17.3 million for the same period last year. The increase of $2.3 million was primarily attributable to an increase of $1.0 million associated with the addition of three acquisitions, $0.3 million in incentive compensation expense, $0.6 million in personnel-related expenses and $0.4 million in professional and other expenses. As a percentage of net sales, SG&A was 17.2% for the fourth quarter of fiscal 2014 compared to 16.8% for the same period last year.
Other operating expenses for the fourth quarter of fiscal 2014 totaled $0.5 million compared to $7.6 million for the same period last year. For the fourth quarter of fiscal 2014 other operating expenses consisted mainly of $0.5 million of amortization of intangibles. For the same period last year, other operating expenses consisted of $6.7 million related to the consolidation and restructuring of large bearing facilities, amortization of intangibles of $0.4 million, and $0.5 million in costs associated with asset disposals and other items.
Operating income for the fourth quarter of fiscal 2014 was $25.2 million compared to operating income of $15.8 million for the same period last year. As a percentage of net sales, operating income was 22.1% compared to 15.3% for the same period last year. On an adjusted basis, operating income for the fourth quarter of fiscal 2014 was $25.2 million compared to adjusted operating income of $22.7 million for the same period last year. As a percentage of net sales, operating income was 22.1% compared to an adjusted 22.0% for the same period last year.
Interest expense, net for the fourth quarter of fiscal 2014 was $0.2 million compared to $0.2 million for the same period last year.
Income tax expense for the fourth quarter of fiscal 2014 was $6.7 million compared to $5.0 million for the same period last year. Our effective income tax rate for the fourth quarter of fiscal 2014 was 26.7% compared to 32.0% for the same period last year. Excluding discrete tax benefits in the fourth quarter fiscal 2014 and 2013 of $1.1 million and $0.2 million, respectively, our effective income tax rate for the fourth quarter of fiscal 2014 would have been 31.1% compared to 29.1% for the fourth quarter of fiscal 2013.
Net income for the fourth quarter of fiscal 2014 was $18.2 million compared to $10.6 million for the same period last year. Excluding the discrete tax benefit in the fourth quarter of fiscal 2014, net income would have been $17.1 million compared to an adjusted net income of $15.9 million for the same period last year, a 7.6% increase year over year.
Diluted EPS for the fourth quarter of fiscal 2014 was 78 cents per share compared to 46 cents per share for the same period last year. On an adjusted basis, diluted EPS for the fourth quarter of fiscal 2014 was 73 cents per share compared to an adjusted 69 cents per share for the same period last year.
Backlog, as of March 29, 2014, was $218.4 million compared to $216.5 million as of March 30, 2013.
Special Dividend
On May 16, 2014, the board of directors declared the payment of a special dividend to shareholders of $2.00 per common share or a total cash outlay of approximately $46.0 million. The special dividend is payable on June 13, 2014, to shareholders of record on May 30, 2014. The ex-dividend date is May 28, 2014. The board of directors opted for a special dividend payment, rather than a regular reoccurring dividend, to allow greater flexibility given the Company’s pipeline of attractive growth opportunities. The board will, however, consider the use of additional special cash dividends in the future as circumstances warrant.
