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RBC Bearings (ROLL) Q1 Earnings Top Estimates, Decline Y/Y

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RBC Bearings Incorporated reported better-than-expected results for the first quarter of fiscal 2021 (ended Jun 27, 2020), wherein both earnings and revenues surpassed the consensus estimate.

On a GAAP basis, net earnings in the quarter were $22.7 million or 91 cents per share compared with a net income of $30.5 million or $1.23 per share in the year-ago quarter.

The machinery company’s adjusted earnings in the reported quarter were 95 cents per share, surpassing the Zacks Consensus Estimate of 87 cents. Notably, earnings declined 22.8% on a year-over-year basis.

Revenue Details

In the quarter under review, RBC Bearings’ revenues of $156.5 million reflected a year-over-year decline of 14.3%. Organic sales in the quarter were down 15.5% year over year.

The company noted that the aerospace end-markets in the quarter were adversely impacted by the pandemic. Its overall aerospace business experienced a 14.9% decrease in revenues. In addition, the company’s business in industrial markets recorded a 13.3% year-over-year decline in revenues.

Revenues surpassed the Zacks Consensus Estimate of $153 million.

Exiting the reported quarter, the company had backlog of $431.9 million, down 6% year over year.

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

Revenues from Plain bearings totaled $78.9 million, down 9.8% year over year, while the same from Roller bearings declined 37.9% year over year to $22.9 million. Ball bearings’ revenues of $18.8 million were up 6.2% year over year. Revenues from Engineered products summed $35.9 million, down 11.5% 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

Margin Profile

In the reported quarter, RBC Bearings’ cost of sales moved down 13.4% year over year to $97 million, representing 62% of net sales compared with 61.2% a year ago. Gross profit decreased 15.9% year over year to $59.5 million. Margin moved down 70 basis points (bps) to 38%.

Selling, general and administrative expenses of $26.8 million were down 11% year over year, accounting for 17.1% of net sales. Operating income declined 25.2% year over year to $28.8 million. Operating margin moved down 270 bps year over year at 18.4%. Interest expenses, net, declined 22.3% year over year to $425 million in the quarter.

Effective tax rate was 20% in the quarter under review compared with 19.3% in the prior-year quarter.

Balance Sheet and Cash Flow

Exiting the fiscal first quarter, RBC Bearings had cash and cash equivalents of $143.6 million, up from $103.3 million recorded at the end of the previous quarter. Total debt was $ 23.1 million, up 0.4% sequentially.

The company also noted that it has outstanding revolving credit facilities of $259.3 million.

In the first three months of fiscal 2021, it generated net cash of $48.4 million from operating activities, up 20.7% from $40.1 million a year ago. Capital spending of $3.9 million fell 67.5% year over year. The company repurchased shares worth $4.4 million, reflecting a decline from $9.5 million in the previous year’s comparable period.On a GAAP basis, net earnings in the quarter was $22.7 million or earnings of 91 cents per share, compared with a net income of $30.5 million or $1.23 per share in the year-ago quarter.

Outlook

For second-quarter fiscal 2021 (ending September 2020), it predicts revenues of $148-$152 million, suggesting a decline from $181.9 million in the year-ago quarter.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks are AptarGroup, Inc. (ATR - Free Report) , Berry Global Group, Inc. (BERY - Free Report) and Cintas Corporation (CTAS - Free Report) . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AptarGroup delivered an earnings surprise of 5.62%, on average, in the trailing four quarters.

Berry Global delivered an earnings surprise of 16.34%, on average, in the trailing four quarters.

Cintas delivered an earnings surprise of 9.09%, on average, in the trailing four quarters.

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