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RBC Bearings (ROLL) Q3 Earnings Top Estimates, Q4 View Solid

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RBC Bearings Incorporated ROLL reported better-than-expected results for third-quarter fiscal 2022 (ended Jan 1, 2022). The company’s earnings surpassed the Zacks Consensus Estimate by 6.06% and quarterly sales beat the same by 5.46%.

Adjusted earnings in the quarter under review were 70 cents per share, surpassing the Zacks Consensus Estimate of 66 cents. However, the bottom line declined 22.2% from the year-ago figure of 90 cents, as higher costs and expenses more than offset the positive impacts of higher revenues.

Revenue Details

In the quarter under review, RBC Bearings’ revenues were $267 million, reflecting an increase of 83% from the year-ago quarter. Organic sales in the quarter grew 7.6%, excluding the impacts of the DODGE buyout.

Exiting the reported quarter, the company had a backlog of $552.7 million, up 21% sequentially.

RBC Bearings’ revenues surpassed the Zacks Consensus Estimate of $253 million and were higher than the company’s projection of $245-$255 million.

On a geographical basis, ROLL’s revenues from the United States increased 79.8% year over year to $233.9 million. Then again, revenues generated from intentional operations totaled $33.1 million, increasing 109.5% from the year-ago quarter.

In the quarter under review, RBC Bearings acquired the DODGE mechanical power transmission division of Asea Brown Boveri Ltd. The deal was announced in July 2021 and was valued at $2.9 billion in cash. With the buyout, RBC Bearings has changed its reportable segments from the previous four — Plain Bearings, Roller Bearings, Ball Bearings and Engineered Products — to the present two segments — Aerospace/Defense and Industrial.

Its segmental performance for the fiscal third quarter is briefly discussed below:

Industrial revenues of $173.8 million (representing 65.1% of the quarter’s revenues) were up 230.4% year over year. Excluding the impacts of the DODGE buyout, the segment’s sales increased 21.3% year over year on the back of strength in mining, general industrial, semiconductor and energy markets.

Aerospace/Defense revenues totaled $93.2 million (representing 34.9% of the quarter’s revenues), decreasing 0.1% year over year. The segment suffered from weakness in defense markets, with sales declining 10.3% year over year. This was partially offset by a 7.5% increase in commercial aerospace sales and 10.5% growth in aerospace OEM component sales.

Margin Profile

In the reported quarter, RBC Bearings’ cost of sales increased 92.3% year over year to $173.6 million, representing 65% of net sales compared with 61.9% a year ago. Gross profit (adjusted) increased 77.8% to $100.3 million. Margin decreased 110 basis points (bps) to 37.6%.

Selling, general and administrative expenses of $43.2 million were up 67.8% year over year, representing 16.2% of the quarter’s net sales. Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) were $71.4 million, increasing 73.9% year over year. The EBITDA margin is at 26.7%, down 140 bps year over year.

Adjusted operating income increased 60.7% to $44.8 million. Adjusted margin declined 230 bps to 16.8%. Net interest expenses were $11.9 million compared with $0.3 million in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting the fiscal third quarter, RBC Bearings had cash and cash equivalents of $255.5 million, down from $1,348.6 million at the end of the previous quarter. Long-term debt was $1,726.7 million, up from $7.1 million in the previous quarter.

In the first nine months of fiscal 2022, the company generated net cash of $133.4 million from operating activities, increasing 20.7% from the previous-year period. Capital expenditure was $21.8 million, increasing 147% year over year.

In the first nine months of the year, the company repurchased shares for $7.7 million, increasing 23.4% year over year.

Outlook

For the fourth quarter of fiscal 2022 (ending March 2022), RBC Bearings anticipates net sales of $340-$350 million (including the impact of Dodge buyout). This represents an increase of 112.1-118.3% from the year-ago figure of $160.3 million.

RBC Bearings Incorporated Price, Consensus and EPS Surprise

RBC Bearings Incorporated Price, Consensus and EPS Surprise
RBC Bearings Incorporated Price, Consensus and EPS Surprise

RBC Bearings Incorporated price-consensus-eps-surprise-chart | RBC Bearings Incorporated Quote

Zacks Rank & Other Important Earnings Releases

With a market capitalization of $5.2 billion, RBC Bearings currently carries a Zacks Rank #3 (Hold).

Three companies from the Zacks Industrial Products sector to soon report results are discussed below:

Ingersoll Rand Inc. IR is scheduled to release fourth-quarter results on Feb 23, after market close. It presently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company reported better-than-expected results in the last four quarters, the earnings surprise being 19.78%, on average. The Zacks Consensus Estimate for Ingersoll’s fourth-quarter earnings has been unchanged in the past 60 days.

Colfax Corporation CFX is slated to release fourth-quarter results on Feb 22, before market open. It presently carries a Zacks Rank #4 (Sell).

In the last four quarters, the company recorded better-than-expected results thrice and in-line results once. It pulled off a trailing four-quarter earnings surprise of 5.64%, on average. The Zacks Consensus Estimate for CFX’s fourth-quarter earnings has been unchanged in the past 60 days.

Barnes Group Inc. B presently carries a Zacks Rank #4. The company is slated to report fourth-quarter 2021 results on Feb 18, before market open.

The company reported better-than-expected results in the last four quarters. The earnings beat for the quarters is 10.99%, on average. The Zacks Consensus Estimate for B’s fourth-quarter earnings has decreased 6.1% in the past 60 days.


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