Business Wire | Nov 12, 2021 08:00AM EST

RBC Bearings Incorporated Announces Fiscal 2022 Second Quarter Results

Nov. 12, 2021

OXFORD, CT--(BUSINESS WIRE)--Nov. 12, 2021--RBC Bearings Incorporated (Nasdaq: ROLL, ROLLP), a leading international manufacturer of highly engineered precision bearings and components for the industrial, defense and aerospace industries, today reported results for the second quarter of fiscal year 2022.

Key Highlights

* Second quarter net sales of $160.9 million increased 10.0% over last year and were at the high end of our guidance range of $158.0 million to $162.0 million. * Second quarter adjusted gross margin of $63.4 million, 39.4%, was up 8.2% over the same period last year (GAAP gross margin 38.8%). * Second quarter year to date adjusted gross margin of $127.2 million, 40.1%, was up 7.7% over the same period last year (GAAP gross margin 39.8%). * Third quarter outlook shows net sales of $245.0 million to $255.0 million including two months of Dodge, a growth rate of 68.0% to 74.8%. * Cash provided by operating activities was $40.2 million for the second quarter compared to $26.1 million last year.

Second Quarter Financial Highlights

Fiscal 2022 Fiscal 2021 Change($ in millions) GAAP Adjusted GAAP Adjusted GAAP Adjusted (1) (1) (1)

Net sales $160.9 $146.3 10.0%

Gross margin $62.5 $63.4 $56.6 $58.6 10.4% 8.2%

Gross margin % 38.8% 39.4% 38.7% 40.0%

Operating income $27.1 $30.5 $26.4 $29.9 2.9% 2.2%

Operating income % 16.9% 19.0% 18.0% 20.4%

Net income $6.9 $23.5 $20.4 $23.2 -66.1% 1.3%

Net income available to $6.4 $23.0 $20.4 $23.2 -68.6% -0.9%common stockholders

Diluted EPS $0.25 $0.89 $0.82 $0.93 -69.5% -4.3%

Diluted EPS - Pre-Offering $0.92 $0.93 -1.1%

(1) Results exclude items in reconciliation below.

Six Month Financial Highlights

Fiscal 2022 Fiscal 2021 Change($ in millions) GAAP Adjusted GAAP Adjusted GAAP Adjusted (1) (1) (1)

Net sales $317.1 $302.8 4.7%

Gross margin $126.2 $127.2 $116.0 $118.0 8.8% 7.7%

Gross margin % 39.8% 40.1% 38.3% 39.0%

Operating income $57.8 $61.8 $55.2 $59.8 4.8% 3.4%

Operating income % 18.2% 19.5% 18.2% 19.8%

Net income $32.9 $49.8 $43.1 $46.8 -23.6% 6.4%

Net income available to $32.4 $49.3 $43.1 $46.8 -24.8% 5.3%common stockholders

Diluted EPS $1.27 $1.93 $1.73 $1.88 -26.6% 2.7%

Diluted EPS - Pre-Offering $1.96 $1.88 4.3%

(1) Results exclude items in reconciliation below.

"We are pleased with our second quarter results which demonstrated exceptional growth in our industrial markets and strong order flow for our aerospace and defense products. We began expanding capacity in the aerospace and defense plants during the period to support this expanded demand," said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. "As we consider the second half of our fiscal year, we expect robust strength for industrial products and strong and continuing growth in aerospace and defense."

Second Quarter Results

Net sales for the second quarter of fiscal 2022 were $160.9 million, an increase of 10.0% from $146.3 million in the second quarter of fiscal 2021. Net sales for the industrial markets increased 31.1% while aerospace market net sales declined 4.4%. Gross margin for the second quarter of fiscal 2022 was $62.5 million compared to $56.6 million for the same period last year. On an adjusted basis, gross margin was $63.4 million for the second quarter of fiscal 2022 compared to an adjusted $58.6 million for the same quarter last year.

SG&A for the second quarter of fiscal 2022 was $29.7 million, an increase of $3.7 million from $26.0 million for the same period last year. The increase was primarily due to higher personnel-related costs of $2.4 million, $1.0 million of additional share-based compensation and $0.3 million of other items. As a percentage of net sales, SG&A was 18.4% for the second quarter of fiscal 2022 compared to 17.8% for the same period last year.

Other operating expenses for the second quarter of fiscal 2022 totaled $5.7 million compared to $4.2 million for the same period last year. For the second quarter of fiscal 2022, other operating income consisted primarily of $2.8 million of amortization of intangibles, $1.4 million of acquisition costs, $1.1 million of restructuring costs and related items and $0.4 million of other items. For the second quarter of fiscal 2021, other operating expenses consisted primarily of $1.5 million of restructuring costs and related items, $2.6 million of amortization of intangible assets and $0.1 million of other items.

Operating income for the second quarter of fiscal 2022 was $27.1 million compared to $26.4 million for the same period last year. Excluding $2.0 million of other restructuring charges and related items and $1.4 million of acquisition costs, adjusted operating income for the second quarter of fiscal 2022 was $30.5 million. Excluding other restructuring charges and related items of $3.5 million, adjusted operating income for the second quarter of fiscal 2021 was $29.9 million. Adjusted operating income as a percentage of net sales was 19.0% for the second quarter of fiscal 2022 compared to 20.4% for the same period last year.

Interest expense, net was $15.8 million for the second quarter of fiscal 2022 compared to $0.3 million for the same period last year. During the second quarter of fiscal 2022, the Company incurred approximately $15.5 million in costs associated with the amortization of a bridge financing commitment obtained in support of the Dodge acquisition.

Income tax expense for the second quarter of fiscal 2022 was $4.7 million compared to $5.4 million for the same period last year. The effective income tax rate for the second quarter of fiscal 2022 was 40.5% compared to 20.9% for the same period last year. The fiscal 2022 second quarter income tax expense included $0.1 million of tax benefits from share-based stock compensation offset by the establishment of a $1.9 million valuation allowance for capital loss carryforwards we don't expect to recognize and $0.1 million of other items. Income tax expense for the second quarter of fiscal 2021 included $0.4 million of tax benefits from share-based stock compensation.

Net income for the second quarter of fiscal 2022 was $6.9 million compared to $20.4 million for the same period last year. On an adjusted basis, net income was $23.5 million for the second quarter of fiscal 2022 compared to $23.2 million for the same period last year. Net income available to common stockholders for the second quarter of fiscal 2022 was $6.4 million compared to $20.4 million for the same period last year. On an adjusted basis, net income available to common stockholders for the second quarter of fiscal 2022 was $23.0 million compared to $23.2 million for the same period last year.

Diluted EPS for the second quarter of fiscal 2022 was $0.25 per share compared to $0.82 per share for the same period last year. On an adjusted basis, diluted EPS was $0.89 per share for the second quarter of fiscal 2022 compared to $0.93 per share for the same period last year. Diluted EPS before the offering of common and preferred stock would have been an adjusted $0.92 per share for the second quarter of fiscal 2022 compared to $0.93 per share for the same period last year.

Backlog as of October 2, 2021 was $456.7 million compared to $403.0 million as of September 26, 2020 and $420.2 million as of July 3, 2021.

Dodge Acquisition

On November 1, 2021, the Company completed the acquisition of Dodge for $2.9 billion in cash, subject to certain purchase price adjustments. The acquisition was financed with approximately $1.1 billion of cash which included $605.7 million from the sale of common equity and $445.5 million from the sale of mandatorily convertible preferred stock ("MCPS"), $1.3 billion of senior debt and $500.0 million of unsecured debt.

Outlook for the Third Quarter Fiscal 2022

The Company expects net sales to be approximately $245.0 million to $255.0 million in the third quarter of fiscal 2022 including two months of Dodge, compared to $145.9 million last year, a growth rate of 68.0% to 74.8%.

Live Webcast

RBC Bearings Incorporated will host a webcast on Friday, November 12th at 11:00 a.m. ET to discuss the quarterly results. To access the webcast, go to the investor relations portion of the Company's website, www.rbcbearings.com, and click on the webcast icon. If you do not have access to the Internet and wish to listen to the call, dial 844-419-1755 (international callers dial 216-562-0468) and provide conference ID #7460907. An audio replay of the call will be available from 1:00 p.m. ET November 12, 2021 until 1:00 p.m. ET November 19, 2021. The replay can be accessed by dialing 855-859-2056 (international callers dial 404-537-3406) and providing conference call ID #7460907. Investors are advised to dial into the call at least ten minutes prior to the call to register.

Non-GAAP Financial Measures

In addition to disclosing results of operations that are determined in accordance with U.S. generally accepted accounting principles (GAAP), this press release also discloses non-GAAP results of operations that exclude certain items. These non-GAAP measures adjust for items that management believes are unusual. Management believes that the presentation of these non-GAAP measures provides useful information to investors regarding the Company's results of operations, as these non-GAAP measures allow investors to better evaluate ongoing business performance. Investors should consider non-GAAP measures in addition to, not as a substitute for, financial measures prepared in accordance with GAAP. A reconciliation of the non-GAAP measures disclosed in this press release with the most comparable GAAP measures are included in the financial table attached to this press release.

About RBC Bearings

RBC Bearings Incorporated is an international manufacturer and marketer of highly engineered precision bearings and components. Founded in 1919, the Company is primarily focused on producing highly technical or regulated bearing products and components requiring sophisticated design, testing and manufacturing capabilities for the diversified industrial, aerospace and defense markets. The Company is headquartered in Oxford, Connecticut.

Safe Harbor for Forward Looking Statements

Certain statements in this press release contain "forward-looking statements." All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including the following: the section of this press release entitled "Outlook"; any projections of earnings, revenue or other financial items relating to the Company, any statement of the plans, strategies and objectives of management for future operations; any statements concerning proposed future growth rates in the markets we serve; any statements of belief; any characterization of and the Company's ability to control contingent liabilities; anticipated trends in the Company's businesses; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "would," "estimate," "intend," "continue," "believe," "expect," "anticipate," and other similar words. Although the Company believes that the expectations reflected in any forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties beyond the control of the Company. These risks and uncertainties include, but are not limited to, risks and uncertainties relating to general economic conditions, the COVID-19 pandemic, geopolitical factors, future levels of aerospace and general industrial manufacturing activity, future financial performance, market acceptance of new or enhanced versions of the Company's products, the pricing of raw materials, changes in the competitive environments in which the Company's businesses operate, the outcome of pending or future litigation and governmental proceedings and approvals, estimated legal costs, increases in interest rates, tax legislation and changes, the Company's ability to meet its debt obligations, the Company's ability to acquire and integrate complementary businesses, and risks and uncertainties listed or disclosed in the Company's reports filed with the Securities and Exchange Commission, including, without limitation, the risks identified under the heading "Risk Factors" set forth in the Company's most recent Annual Report filed on Form 10-K. The Company does not intend, and undertakes no obligation, to update or alter any forward-looking statements.

RBC Bearings IncorporatedConsolidated Statements of Operations(dollars in thousands, except share and per share data)(Unaudited)

Three Months Ended Six Months Ended October 2, September 26, October 2, September 26, 2021 2020 2021 2020

Net sales $ 160,900 $ 146,335 $ 317,105 $ 302,828

89,739 190,868 186,779Cost of sales 98,436

56,596 126,237 116,049Gross margin 62,464

Operatingexpenses:Selling, 26,023 52,852general and 29,674 59,476administrative 4,210 8,020Other, net 5,667 8,915

Total 30,233 60,872operating 35,341 68,391expenses Operating 26,363 55,177income 27,123 57,846

Interest 343 768expense, net 15,770 16,089

Other non-operating (291) 211 (756) 253(income)/expenseIncome before 25,809 54,156income taxes 11,644 42,513

Provision for 5,388 11,046income taxes 4,715 9,585

20,421 43,110Net income 6,929 32,928

Preferred stock 510 - 510 -dividendsNet incomeavailable to $ 6,419 $ 20,421 $ 32,418 $ 43,110commonstockholders Net income pershareavailable tocommonstockholders:Basic $ 0.25 $ 0.82 $ 1.28 $ 1.74

Diluted $ 0.25 $ 0.82 $ 1.27 $ 1.73

Weightedaverage commonshares:Basic 25,500,393 24,823,658 25,260,728 24,793,245

Diluted 25,775,794 24,957,158 25,544,088 24,944,608

Three Months Ended Six Months EndedReconciliationof Reported October 2, September 26, October 2, September 26,Gross MargintoAdjusted Gross 2021 2020 2021 2020Margin:Reported gross $ 62,464 $ 56,596 $ 126,237 $ 116,049marginRestructuring 1,994 1,994and 929 929consolidationAdjusted gross $ 63,393 $ 58,590 $ 127,166 $ 118,043margin Three Months Ended Six Months EndedReconciliationof Reported October 2, September 26, October 2, September 26,OperatingIncome toAdjusted 2021 2020 2021 2020OperatingIncome:Reported $ 27,123 $ 26,363 $ 57,846 $ 55,177operatingincomeAcquisition costs 1,433 - 1,433 -

Restructuring 3,514 4,633and 1,987 2,544consolidationAdjusted $ 30,543 $ 29,877 $ 61,823 $ 59,810operatingincome Reconciliationof Reported Three Months Ended Six Months EndedNet Income andNet IncomePer CommonShare to October 2, September 26, October 2, September 26,Adjusted NetIncome andAdjusted Net 2021 2020 2021 2020Income PerCommon Share:Reported net $ 6,929 $ 20,421 $ 32,928 $ 43,110incomeAcquisition and related 13,049 - 13,049 -financingcosts (1)Restructuring and 1,534 2,780 2,003 3,676consolidation(1)Foreign exchange 61 115 72 176translationloss (1)Discrete and (102) (127)other tax 1,952 1,792items benefitAdjusted net $ 23,525 $ 23,214 $ 49,844 $ 46,835income Preferred stock 510 - 510 -dividends Adjusted netincome $ 23,015 $ 23,214 $ 49,334 $ 46,835available tocommonstockholders (1) After tax impact. Tax rate of 22.8% applied in the three months ended October 2, 2021.

Adjusted net incomeper common share: $ $ $ $ Basic 0.90 0.94 1.95 1.89

$ $ $ $ Diluted 0.89 0.93 1.93 1.88

Diluted - $ $ $ $ Pre-Offering 0.92 0.93 1.96 1.88

Weighted averagecommon shares: Basic 25,500,393 24,823,658 25,260,728 24,793,245

Diluted 25,775,794 24,957,158 25,544,088 24,944,608

Diluted - Pre-Offering (1) 25,434,586 24,957,158 25,373,484 24,944,608

(1) Excludes the three- and six-month impact of the common stock and MCPS offerings of 341,208 and 170,604 weighted average shares, respectively.

Three Months Ended Six Months Ended October 2, September 26, October 2, September 26,SegmentData, Net 2021 2020 2021 2020ExternalSales:Plain $ $ $ $ 149,928bearings 74,079 71,053 147,400segmentRoller 44,479bearings 27,309 21,579 52,556segmentBall 39,939bearings 24,431 21,099 47,559segmentEngineered 68,482products 35,081 32,604 69,590segment $ $ $ $ 302,828 160,900 146,335 317,105

Three Months Ended Six Months Ended October 2, September 26, October 2, September 26,Selected 2021 2020 2021 2020FinancialData:Depreciation $ $ $ $ 16,833and 8,645 8,437 16,857amortization Share-based stock 6,224 5,231 11,996 10,669compensationexpense Adjustedoperatingincome plusdepreciation/amortizationplusshare-based $ $ $ $ 87,312stock 45,412 43,545 90,676compensationexpense Cash provided by $ 40,181 $ 26,120 $ 93,474 $ 74,479operatingactivities Capital $ $ $ $ 6,008expenditures 3,515 2,133 6,882

$ $ 20,392Total debt 7,605

$ $ 166,352Cash on hand 297,481

Cash from equity 1,051,130 - offerings $ $ 166,352Total cash 1,348,611

Repurchase $ $ 4,399of common 6,356stock $ $ 402,958Backlog 456,741

Three Months Ended Six Months Ended October 2, September 26, October 2, September 26,Net External 2021 2020 2021 2020Sales byChannel (1)Aerospace:Commercial - $ $ $ $ 101,745OEM 42,700 46,285 85,581

Commercial - 26,297Aftermarket/ 11,088 10,853 23,327Distribution 58,081Defense 29,494 30,003 55,267

186,123 83,282 87,141 164,175

Industrial:OEM and 79,600Marine 53,660 40,232 104,390

Aftermarket/ 37,105Distribution 23,958 18,962 48,540

116,705 77,618 59,194 152,930

$ $ $ $ 302,828 160,900 146,335 317,105

(1) End markets in each period presented are based on internal definitions and metrics considered by management and are periodically reviewed and updated when evaluating the performance of the business.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211112005365/en/

CONTACT: RBC Bearings Robert Sullivan 203-267-5014 Rsullivan@rbcbearings.com

CONTACT: Alpha IR Group Michael Cummings 617-461-1101 investors@rbcbearings.com