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

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RBC Bearings Incorporated ROLL delivered better-than-expected results for the third quarter of fiscal 2021 (ended Dec 26, 2020), with earnings surpassing estimates by 5.88%. This was the company’s third consecutive quarter of impressive earnings results. Also, its quarterly sales beat estimates by 2.56%.

Adjusted earnings in the reported quarter were 90 cents per share, surpassing the Zacks Consensus Estimate of 85 cents. Also, the bottom line decreased 26.2% from the year-ago quarter’s figure of $1.22 on weak sales and margin decline.

Revenue Details

In the reported quarter, RBC Bearings’ net sales were $145.9 million, declining 17.6% year over year due to the adverse impacts of the pandemic on operations.

The company’s overall aerospace business experienced a 29.7% decline in revenues. On the other hand, its business in industrial markets improved and recorded a 5.5% year-over-year increase in revenues.

However, the top line surpassed the Zacks Consensus Estimate of $142 million.

Exiting the reported quarter, the company had a backlog of $393.9 million, down 2.2% year over year.

RBC Bearings reports net sales under four heads/segments that are discussed below:

Revenues in Plain bearings totaled $69.3 million, down 20.2% year over year, while that for Roller bearings declined 29.6% year over year to $22.4 million. Ball bearings’ revenues of $20.7 million were up 11.8% year over year. Revenues in Engineered products summed $33.5 million, down 16% year over year.

Margin Picture

In the reported quarter, RBC Bearings’ cost of sales decreased 15.1% year over year to $90.3 million, representing 61.9% of net sales compared with 60.1% a year ago. Adjusted gross profit decreased 20.4% year over year to $56.4 million. Margin slipped 140 basis points (bps) to 38.7%.

Selling, general and administrative expenses of $25.7 million were down 16.2% year over year, accounting for 17.7% of net sales. Adjusted operating income declined 26.2% year over year to $27.9 million. Adjusted margin decreased 230 bps year over year to 19.1%. Interest expenses, net, declined 29.8% year over year to $0.3 million in the quarter.

Effective tax rate was 17.9% in the quarter under review compared with 17% in the prior-year quarter.

Balance Sheet and Cash Flow

Exiting the fiscal third quarter, RBC Bearings had cash and cash equivalents of $126.2 million, down 24.2% from $166.4 million recorded at the end of the previous quarter. Long-term debt was $14.4 million, up 4.1% sequentially.

In the first nine months of fiscal 2021, the company generated net cash of $110.6 million from operating activities, down 0.5% from $111.2 million in the year-ago comparable period. Capital spending of $8.8 million fell 68% year over year.

During the fiscal first nine months, the company repurchased shares worth $6.2 million, down from $11.6 million in the previous-year period.

Outlook

For the fourth quarter of fiscal 2021 (ending March 2021), RBC Bearings anticipates net sales of $155-$160 million, suggesting a decline from $185.8 million generated in the year-ago quarter.

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 & Stocks to Consider

With a market capitalization of $4.2 billion, RBC Bearings currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industry are Altra Industrial Motion Corp. AIMC, Applied Industrial Technologies, Inc. AIT and Graco Inc. GGG. All these companies presently carry a Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 30 days, bottom-line estimates for these companies have improved for the current year. Further, positive earnings surprise in the last reported quarter was 77.55% for Altra Industrial, 28.95% for Applied Industrial and 19.61% for Graco.

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