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RBC Bearings (ROLL) Q4 Earnings & Revenues Top Estimates

Zacks Equity Research

RBC Bearings Incorporated ROLL pulled off a positive earnings surprise of 9% in the fourth quarter of fiscal 2019 (ended Mar 30, 2019). This was the company’s fourth consecutive quarter of impressive results.

This machinery company’s adjusted earnings were $1.33 per share, surpassing the Zacks Consensus Estimate of $1.22. Also, the bottom line increased 23.1% from the year-ago quarter’s figure of $1.08 on the back of healthy sales growth, margin improvement and lower taxes.

Notably, RBC Bearings reported adjusted earnings of $4.84 for fiscal 2019, an increase of 25.1% from the prior year.

Organic Sales Drive Revenues

In the quarter under review, RBC Bearings’ revenues totaled $182.2 million, reflecting year-over-year growth of 1.3%. Organic sales jumped 4% on the back of 10.2% growth in aerospace markets, partially offset by 5% decrease in industrial markets.

Moreover, the top line surpassed the consensus estimate of $179.97 million by 1.2%.

For fiscal 2019, RBC Bearings generated revenues of $702.5 million compared with $674.9 million in fiscal 2018.

Exiting the reported quarter, the company had backlog of $445.1 million, up 13.5% year over year.

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

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

Revenues from Plain bearings totaled $87.9 million, up 7.3% year over year while that from Roller bearings increased 0.8% to $36.1 million. Ball bearings’ revenues were $19.5 million, up 2.1%. Revenues from Engineered products totaled $38.6 million, down 10.4%.

Margins Improve Y/Y

In the reported quarter, RBC Bearings’ cost of sales declined 0.7% year over year to $109.2 million. It represented 59.9% of net sales versus 61.1% recorded in the year-ago quarter. Gross profit in the quarter increased 4.6% to $73 million. Margin in the quarter grew 130 basis points to 40.1%.

Selling, general and administrative expenses of $29.5 million decreased 0.3%, and represented 16.2% of net sales versus 16.5% in the year-ago quarter. Adjusted operating income in the reported quarter increased 7% to $41.2 million. Adjusted margin was 22.6% versus 21.4% in the year-ago quarter.

Effective tax rate was 20.8%, lower than 25.5% a year ago.

Balance Sheet and Cash Flow

As of Mar 30, 2019, RBC Bearings had cash and cash equivalents of $29.9 million, decreasing 44.8% from $54.2 million recorded as of Mar 31, 2018. Total debt was $43.6 million, down from $173.4 million.

In fiscal 2019, the company generated net cash of $108.5 million from operating activities, down 16.7% from $130.3 million in fiscal 2018. Capital spending totaled $41.3 million, increasing 47.5%.

During fiscal 2019, the company repurchased shares worth $5.2 million while backlog at the end of the year was $445.1 million.

Outlook

RBC Bearings anticipates net sales of $182-$184 million for the first quarter of fiscal 2020 (ending June 2019), representing growth of 3.4-4.6% year over year.

Zacks Rank & Key Picks

RBC Bearings currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Roper Technologies, Inc. ROP, DXP Enterprises, Inc. DXPE and Dover Corporation DOV. While Roper sports a Zacks Rank #1 (Strong Buy), DXP Enterprises and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Roper delivered average earnings surprise of 8.43% in the trailing four quarters.

DXP Enterprises pulled off average positive earnings surprise of 48.47% in the trailing four quarters.

Dover outpaced estimates in the last reported quarter by 8.61%.

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