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RBC Beats Earnings, Lags Rev in 4Q13

Zacks Equity Research

Metal products company RBC Bearings Inc. (ROLL) reported fiscal fourth quarter 2013 financial results with adjusted earnings of 69 cents per share, beating the Zacks Consensus Estimate of 63 cents per share. Efficiency gains as well as margin expansion facilitated the beat. However, the results were flat when compared with the year-ago earnings.

For fiscal 2013, RBC reported earnings of $2.43 per share, beating the Zacks Consensus Estimate of $2.38 per share.

Revenue: Net sales in the fiscal fourth quarter were $103.0 million, down 7.5% year over year due to a decline witnessed in the Industrial segment, which was partly offset by a rise in the sales in aerospace and defense segment. Revenue also missed the Zacks Consensus Estimate of $108.0 million by 4.6%. Revenue detail of each segment is discussed below:

Plain Bearings segment revenue (54.2% of fourth quarter total sales) was down 1.5% year over year to $55.8 million. Roller Bearings segment sales (26.7%) dropped 21.8% to $27.5 million. Ball Bearings segment sales (10.9%) were $11.2 million, down 1.6% year over year. Other sales (8.2%) were $8.5 million, up 3.9% year over year.

In fiscal 2013, RBC generated $403.1 million revenue, missing the Zacks Consensus Estimate of $407.0 million by 1.2%.

Costs/Margins: In the reported quarter, RBC Bearing’s cost of goods sold represented 60.5% of total revenue, compared with 63.0% in the year-ago quarter. Selling, general and administrative expenses were roughly $17.3 million and accounted for 16.8% of total revenue. Adjusted operating margin in the quarter was recorded at 22.0%, increasing 40 basis points year over year.

Balance Sheet: RBC Bearing’s cash and cash equivalents increased to $115.8 million exiting the fourth quarter of fiscal 2013 against $113.2 million in the previous quarter. Total debt balance came in at $10.3 million versus $10.9 million reported in the preceding sequential quarter.

Cash Flow: In fiscal 2013, cash flow from operating activities was recorded at $66.3 million versus $45.0 million a year-ago. Capital spending was recorded at a high of $42.0 million against $17.8 million in the fiscal 2012.

In early March, the company acquired Western Precision Aero LLC, a manufacturer of precision components and gears. The transaction was valued at $2.6 million.

The step seems to fit the company’s strategy of increasing its product offerings for customers. Revenue generated from the acquisition is included in the Plain Bearings segment of the company.

RBC currently carries a Zacks Rank #4 (Sell). Other stocks worth a watch in the industry are NSK Ltd. (NPSKY), carrying a Zacks Rank #1 (Strong Buy); while, Northwest Pipe Co. (NWPX) and Precision Castparts Corp. (PCP) hold a Zacks Rank #2 (Buy).

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