RBC Bearings Incorporated’s (RBC - Free Report) second-quarter fiscal 2024 (ended September 2023) adjusted earnings of $2.17 per share increased 12.4% from the year-ago earnings of $1.93 per share, supported by higher revenues.
Revenue Details
In the quarter under review, RBC Bearings’ revenues were $385.6 million, reflecting an increase of 4.4% from the year-ago quarter’s level. However, RBC Bearings’ revenues missed the Zacks Consensus Estimate of $390 million.
While exiting the reported quarter, RBC had a backlog of $641.3 million, down 1.8% year over year.
RBC currently has two reportable segments, namely Aerospace/Defense and Industrial. Its segmental performance for the fiscal second quarter is briefly discussed below:
Industrial revenues of $258.3 million (representing 67% of the quarter’s revenues) were down 2.8% year over year.
Aerospace/Defense revenues totaled $127.3 million (representing 33% of the quarter’s revenues), increasing 22.9% year over year.
Margin Profile
In the reported quarter, RBC Bearings’ cost of sales increased 0.6% year over year to $219.2 million. Gross profit increased 10% to $166.3 million. The margin increased 220 basis points (bps) to 43.1%.
Selling, general and administrative expenses were $60.6 million, up 5.3% year over year. Adjusted EBITDA was $122.1 million, increasing 12.3%. The EBITDA margin was 31.7%, up 220 bps year over year.
Adjusted operating income increased 16.3% to $88.4 million. The adjusted margin increased 230 bps to 22.9%. Net interest expenses were $20.1 million compared with $18.3 million in the year-ago quarter.
Balance Sheet and Cash Flow
At the time of exiting the fiscal second quarter, RBC Bearings had cash and cash equivalents of $56.6 million compared with $65.4 million at the end of the fourth quarter of fiscal 2023. Total debt was $1,323.5 million, down from $1,395.0 million at the end of the fourth quarter of fiscal 2023.
In the first six months of fiscal 2024, RBC Bearings generated net cash of $114.8 million from operating activities, increasing 29.9% from the previous-year period’s number. Capital expenditure was $7.5 million, decreasing 50.8% from the year-ago quarter.
In the same time period, RBC Bearings repurchased shares for $7 million, increasing 17.3% year over year.
Outlook
For the third quarter of fiscal 2024, RBC Bearings anticipates net sales to be $370-$380 million, suggesting an increase of 5.2-8.1% from the year-ago figure of $351.6 million. The Zacks Consensus Estimate for the quarter is pegged at $390.22 million. The gross margin (as a percentage of net sales) is expected to be 42.25-42.75% for the quarter. RBC predicts selling, general and administrative expenses (as a percentage of net sales) to be 17.00-17.50%. For the fiscal quarter, the company expects interest expense (net) to be $19,500-$20,000.
Zacks Rank & Stocks to Consider
RBC currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:
Graco Inc. (GGG - Free Report) presently carries a Zacks Rank #2 (Buy). GGG’s earnings surprise in the last four quarters was 7.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, estimates for Graco’s 2023 earnings have increased 1.3%. The stock has gained 9% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 13.9%, on average.
AIT’s earnings estimates have increased 1.9% for fiscal 2024 (ending June 2024) in the past 60 days. Shares of Applied Industrial have risen 22.6% in the past year.
A. O. Smith Corporation (AOS - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of approximately 14%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 4.5% for 2023. The stock has soared 20.4% in the past year.
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RBC Bearings Incorporated’s (RBC - Free Report) second-quarter fiscal 2024 (ended September 2023) adjusted earnings of $2.17 per share increased 12.4% from the year-ago earnings of $1.93 per share, supported by higher revenues.
Revenue Details
In the quarter under review, RBC Bearings’ revenues were $385.6 million, reflecting an increase of 4.4% from the year-ago quarter’s level. However, RBC Bearings’ revenues missed the Zacks Consensus Estimate of $390 million.
While exiting the reported quarter, RBC had a backlog of $641.3 million, down 1.8% year over year.
RBC currently has two reportable segments, namely Aerospace/Defense and Industrial. Its segmental performance for the fiscal second quarter is briefly discussed below:
Industrial revenues of $258.3 million (representing 67% of the quarter’s revenues) were down 2.8% year over year.
Aerospace/Defense revenues totaled $127.3 million (representing 33% of the quarter’s revenues), increasing 22.9% year over year.
Margin Profile
In the reported quarter, RBC Bearings’ cost of sales increased 0.6% year over year to $219.2 million. Gross profit increased 10% to $166.3 million. The margin increased 220 basis points (bps) to 43.1%.
Selling, general and administrative expenses were $60.6 million, up 5.3% year over year. Adjusted EBITDA was $122.1 million, increasing 12.3%. The EBITDA margin was 31.7%, up 220 bps year over year.
Adjusted operating income increased 16.3% to $88.4 million. The adjusted margin increased 230 bps to 22.9%. Net interest expenses were $20.1 million compared with $18.3 million in the year-ago quarter.
Balance Sheet and Cash Flow
At the time of exiting the fiscal second quarter, RBC Bearings had cash and cash equivalents of $56.6 million compared with $65.4 million at the end of the fourth quarter of fiscal 2023. Total debt was $1,323.5 million, down from $1,395.0 million at the end of the fourth quarter of fiscal 2023.
In the first six months of fiscal 2024, RBC Bearings generated net cash of $114.8 million from operating activities, increasing 29.9% from the previous-year period’s number. Capital expenditure was $7.5 million, decreasing 50.8% from the year-ago quarter.
In the same time period, RBC Bearings repurchased shares for $7 million, increasing 17.3% year over year.
Outlook
For the third quarter of fiscal 2024, RBC Bearings anticipates net sales to be $370-$380 million, suggesting an increase of 5.2-8.1% from the year-ago figure of $351.6 million. The Zacks Consensus Estimate for the quarter is pegged at $390.22 million. The gross margin (as a percentage of net sales) is expected to be 42.25-42.75% for the quarter. RBC predicts selling, general and administrative expenses (as a percentage of net sales) to be 17.00-17.50%. For the fiscal quarter, the company expects interest expense (net) to be $19,500-$20,000.
Zacks Rank & Stocks to Consider
RBC currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:
Graco Inc. (GGG - Free Report) presently carries a Zacks Rank #2 (Buy). GGG’s earnings surprise in the last four quarters was 7.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, estimates for Graco’s 2023 earnings have increased 1.3%. The stock has gained 9% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 13.9%, on average.
AIT’s earnings estimates have increased 1.9% for fiscal 2024 (ending June 2024) in the past 60 days. Shares of Applied Industrial have risen 22.6% in the past year.
A. O. Smith Corporation (AOS - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of approximately 14%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 4.5% for 2023. The stock has soared 20.4% in the past year.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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