RBC Bearings Incorporated, a leading international manufacturer of highly-engineered precision plain, roller and ball bearings for the industrial, defense and aerospace industries, today reported results for the second quarter ended September 27, 2008.
"We are very pleased to report revenue growth of 20.5% and adjusted earnings per share growth of 17.1%," said Dr. Michael J. Hartnett, Chairman and Chief Executive Officer. "We continue to see strength in most of our core markets and feel we are on track for another strong year."
Second Quarter Results.
Net sales for the second quarter of fiscal 2009 were $94.3 million, an increase of 20.5% from $78.2 million in the second quarter of fiscal 2008. Gross margin for the second quarter rose 15.2% to $30.2 million compared to $26.2 million for the same period last year. Gross margin as a percentage of net sales was 32.0% in the second quarter of fiscal 2009 compared to 33.5% for the same period last year. The decline in gross margin percentage was mainly driven by start-up costs associated with the Company's expansion into new bearing products and the inclusion of recent acquisitions which are currently operating at lower gross margin levels. Gross margin as a percentage of sales, excluding $0.6 million of start-up costs, was 32.7% compared to 33.5% for the same period last year.
Operating income increased 8.4% to $15.2 million for the second quarter of fiscal 2009 compared to $14.0 million for the same period last year. As a percentage of net sales, operating income was 16.1% compared to 17.9% for the same period last year. Operating income excluding start-up costs associated with the expansion into new bearing products, facility moving and consolidation expenses and disposal of fixed assets was $16.6 million, an increase of 15.1% compared to adjusted operating income for the same period last year. As a percentage of net sales, operating income, excluding these charges, was 17.6% compared to 18.4% for the same adjusted period last year.
Interest expense, net for the second quarter of fiscal 2009 was $0.7 million, a decrease of $0.2 million, from $0.9 million for the same period last year.
For the second quarter of fiscal 2009, the Company reported net income of $9.6 million compared to net income of $8.7 million in the same period last year. Excluding the after-tax start-up costs associated with the expansion into new bearing products, facility moving and consolidation expenses and disposal of fixed assets, net income increased 16.6% to $10.5 million compared to $9.0 million for the same adjusted period last year.
Six Month Results
Net sales for the six month period ended September 27, 2008 were $186.7 million, an increase of 18.1% from $158.1 million for the six month period ended September 29, 2007. Gross margin for the six month period ended September 27, 2008 rose 13.2% to $60.8 million compared to $53.7 million for the same period last year. Gross margin as a percentage of net sales was 32.6% for the six month period of fiscal 2009 compared to 34.0% for the same period last year. The decline in gross margin percentage was mainly driven by start-up costs associated with the Company's expansion into new bearing products and the inclusion of recent acquisitions which are currently operating at lower gross margin levels. Gross margin as a percentage of sales, excluding $1.0 million of start-up costs, was 33.1% compared to 34.0% for the same period last year.
For the six month period ended September 27, 2008, the Company reported operating income of $32.2 million compared to $29.8 million for the same period last year. Operating income excluding start-up costs associated with the expansion into new bearing products, facility moving and consolidation expenses and disposal of fixed assets increased 12.6% to $34.1 million for the six month period ended September 27, 2008 compared to $30.3 million for the same adjusted period last year. Operating income as a percentage of sales excluding these charges was 18.3% for the first six months of fiscal 2009 compared to 19.2% for the same adjusted period last year.
Interest expense, net for the six month period ended September 27, 2008 was $1.3 million, a decrease of $0.6 million, from $1.9 million for the same period last year.
Net income for the six month period ended September 27, 2008 was $20.3 million compared to net income of $18.6 million for the same period last year. Excluding the after-tax start-up costs associated with the expansion into new bearing products, facility moving and consolidation expenses, disposal of fixed assets and the loss on early extinguishment of debt, net income increased 14.9% to $21.8 million compared to $18.9 million for the same adjusted period last year.
Plant Move and Consolidation
The Company completed the move of its West Coast manufacturing facility and incurred a final charge of $0.1 million in the second quarter. The Company also started the consolidation and rationalization of its South Carolina operations. This consolidation has resulted in a charge of $0.6 million in the second quarter with a final charge of approximately $0.6 million expected in the third quarter of this fiscal year.
Liquidity
The Company ended the second quarter of fiscal 2009 with cash of $9.2 million, debt of $51.2 million and availability under its credit lines of approximately $94.6 million. The banks participating in the Company's U.S. bank facility of $150.0 million are J.P. Morgan, Bank of America, Keybank, Citigroup, and Comerica. This facility expires in June 2011.
Outlook
"With regard to the second half of fiscal 2009, we remain cautious as a result of recent world events in the financial markets. However, we are reassured as many of our businesses are booked through the end of this year and some well into the next period," concluded Dr. Hartnett. "The introduction of new products for our existing customers has been robust and we expect that past years' product development efforts and expenses will now turn into new revenues in the months ahead."
Based on current market conditions and assessments, the Company expects financial performance in its third quarter of fiscal 2009 to be as follows:
-- Net sales in the range of $87.0 - $92.0 million
-- Adjusted operating income in the range of $14.0 - $16.0 million
Live Webcast
RBC Bearings Incorporated will host a webcast at 10:00 a.m. ET today 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 877-604-9670 (international callers dial 719-325-4873). An audio replay of the call will be available from 1:00 p.m. ET on Thursday, November 6th until 11:59 p.m. ET on Thursday, November 20th. The replay can be accessed by dialing 888-203-1112 (international callers dial 719-457-0820) and entering conference call ID # 4040758. Investors are advised to dial into the call at least ten minutes prior to the call to register.
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