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RBC Bearings (ROLL) Q3 Earnings Top Estimates, Up Y/Y on Sales

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RBC Bearings Incorporated (ROLL - Free Report) reported better-than-expected results for the third quarter of fiscal 2019 (ended Dec 29, 2018), delivering a positive earnings surprise of 0.9%. This was the company’s third consecutive quarter of impressive results.

This machinery company’s adjusted earnings in the reported quarter were $1.15 per share, surpassing the Zacks Consensus Estimate of $1.14. Also, the bottom line increased 9.5% from the year-ago quarter’s number of $1.05 on the back of healthy sales growth, margin improvement and lower taxes.

Organic Sales Drive Revenues

In the quarter under review, RBC Bearings’ revenues totaled $171.5 million, reflecting year-over-year growth of 2.8%. Organic sales in the quarter grew 6.5% year over year on the back of 6.4% growth in aerospace markets and 6.7% increase in industrial markets.

However, the top line lagged the Zacks Consensus Estimate of $176.2 million by 2.7%.

Exiting the reported quarter, the company had backlog of $428.2 million, up 9.1% year over year.

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

Revenues from Plain bearings totaled $79.3 million, up 13.7% year over year while that from Roller bearings increased 7.3% year over year to $34.8 million. Ball bearings’ revenues were $16.7 million, up 1.4% year over year. Revenues from Engineered products totaled $40.6 million, down 15.6% year over year.

Margins Improve Y/Y

In the reported quarter, RBC Bearings’ cost of sales grew 1.2% year over year to $103.3 million. It represented 60.2% of net sales versus 61.2% recorded in the year-ago quarter. Gross profit in the quarter increased 5.2% year over year to $68.1 million. Margin in the quarter grew 90 basis points (bps) to 39.7%.

Selling, general and administrative expenses of $29.1 million increased 3.5% year over year, and represented 17% of net sales versus 16.9% in the year-ago quarter. Adjusted operating income in the reported quarter increased 6.6% year over year to $6.6 million. Adjusted margin was 21.4% versus 20.6% in the year-ago quarter.

Effective tax rate was 15% in the quarter under review, lower than 23.9% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting the fiscal third quarter, RBC Bearings had cash and cash equivalents of $81.7 million, increasing 35.3% from $60.4 million recorded at the previous quarter end. Total debt was $114.1 million, down 8% sequentially.

In the first nine months of fiscal 2019, the company generated net cash of $79 million from operating activities, down 14.6% from $92.5 million recorded in the year-ago comparable period. Capital spending totaled $29.2 million, increasing 20.5% year over year.

During the period, the company repurchased shares worth $4.7 million while backlog at the end of the period was $428.2 million.

Outlook

RBC Bearings anticipates net sales of $178-$180 million for the fourth quarter of fiscal 2019 (ending March 2019).

Roper Technologies, Inc. Price, Consensus and EPS Surprise

 

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Zacks Rank & Stocks to Consider

With a market capitalization of approximately $3.5 billion, RBC Bearings currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Industrial Products sector are Roper Technologies, Inc. (ROP - Free Report) , Dover Corporation (DOV - Free Report) and Colfax Corporation (CFX - Free Report) . All the stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past 60 days, earnings estimates for Roper Technologies have decreased for 2019 while that for Dover and Colfax improved. Positive earnings surprise for the last four quarters was 4.96% for Roper, 6.59% for Dover and 8.88% for Colfax.

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