RBC Bearings (ROLL) Q3 Earnings Top Estimates, Up Y/Y On Sales

RBC Bearings Incorporated (NASDAQ:ROLL) reported better-than-expected results for the third quarter of fiscal 2019 (ended Dec 29, 2018), delivering a positive earnings surprise of 0.9%. This was the company’s third consecutive quarter of impressive results.

This machinery company’s adjusted earnings in the reported quarter were $1.15 per share, surpassing the Zacks Consensus Estimate of $1.14. Also, the bottom line increased 9.5% from the year-ago quarter’s number of $1.05 on the back of healthy sales growth, margin improvement and lower taxes.

Organic Sales Drive Revenues

In the quarter under review, RBC Bearings’ revenues totaled $171.5 million, reflecting year-over-year growth of 2.8%. Organic sales in the quarter grew 6.5% year over year on the back of 6.4% growth in aerospace markets and 6.7% increase in industrial markets.

However, the top line lagged the Zacks Consensus Estimate of $176.2 million by 2.7%.

Exiting the reported quarter, the company had backlog of $428.2 million, up 9.1% year over year.

RBC Bearings reports net sales under four heads/segments. The segmental results are briefly discussed below:

Revenues from Plain bearings totaled $79.3 million, up 13.7% year over year while that from Roller bearings increased 7.3% year over year to $34.8 million. Ball bearings’ revenues were $16.7 million, up 1.4% year over year. Revenues from Engineered products totaled $40.6 million, down 15.6% year over year.

Margins Improve Y/Y

In the reported quarter, RBC Bearings’ cost of sales grew 1.2% year over year to $103.3 million. It represented 60.2% of net sales versus 61.2% recorded in the year-ago quarter. Gross profit in the quarter increased 5.2% year over year to $68.1 million. Margin in the quarter grew 90 basis points (bps) to 39.7%.

Selling, general and administrative expenses of $29.1 million increased 3.5% year over year, and represented 17% of net sales versus 16.9% in the year-ago quarter. Adjusted operating income in the reported quarter increased 6.6% year over year to $6.6 million. Adjusted margin was 21.4% versus 20.6% in the year-ago quarter.

Effective tax rate was 15% in the quarter under review, lower than 23.9% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting the fiscal third quarter, RBC Bearings had cash and cash equivalents of $81.7 million, increasing 35.3% from $60.4 million recorded at the previous quarter end. Total debt was $114.1 million, down 8% sequentially.

In the first nine months of fiscal 2019, the company generated net cash of $79 million from operating activities, down 14.6% from $92.5 million recorded in the year-ago comparable period. Capital spending totaled $29.2 million, increasing 20.5% year over year.

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During the period, the company repurchased shares worth $4.7 million while backlog at the end of the period was $428.2 million.

Outlook

RBC Bearings anticipates net sales of $178-$180 million for the fourth quarter of fiscal 2019 (ending March 2019).

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