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The eBearing News
November 15, 2005
RBC Reports Second Quarter 2006 Results
copyright © 2005 eBearing Inc.
RBC Bearings Inc. (USA, NASDAQ:
ROLL)
reported financial results for second quarter 2006, ended October 1, 2005. RBC's fiscal year runs from April to April.
Second quarter sales reached USD $65.4 million, up 16% over 2005's $56.4 million.
Gross margin in the quarter was 30.6%, or $20 million, up from 27.3%, or
$15.4 million last year. RBC attributed the improved margins to several effects, most notably higher
manufacturing volumes, supply contracts rolling over which allowed higher pricing in their
replacements, and improving the operating methods of the businesses it has acquired.
Operating income in the quarter was $5.1 million, down from $7.4 million in 2005.
RBC's high debt load consumed most, however; $4.5 million
of the quarter's $5.1 million operating income went to debt service.
With the debt service, along with one-time charges related to its IPO,
RBC was not able to translate its higher sales into net income. Instead, the company returned a
net loss of $2.0 million for the quarter, reversing 2005's $1.7 million net income.
Dr. Michael Hartnett, RBC's Chairman, President and CEO, said: "We are pleased with our results in the first six
months of the year. Growing demand for our specialized, value-added products and continuing focus on operational
and financial discipline contributed to this quarter's record revenue growth and margin expansion. The underlying
trends in our core markets remain robust, and customer relationships continue to grow and strengthen."
Reflecting on the company's performance during the earnings call, Dr. Hartnett commented: "It's a
good time to be in the bearing business, for sure."
RBC operates 17 manufacturing facilities in 3 countries. It manufactures plain bearings, roller
bearings, ball bearings, and related specialty products which include precision ball screws and
machine tool collets. While RBC bearings cover a wide variety of designs and applications, the
company's business units focus on, "highly technical or regulated bearing products for specialized
markets that require sophisticated design, testing and manufacturing capabilities."
RBC has been intentionally moving away from its traditional reliance on industrial bearing sales
to a stronger presence in the aerospace and defense market. What had been a sales mix 60% industrial
and 40% aerospace/defense is now moving toward the 50% / 50% split it achieved in this most
recent quarter. RBC said the, "economic intensities," and general robust growth across the aerospace
and defense markets helped them move into the forefront more quickly than expected.
RBC reports results as four segments:
Plain Bearing Segment
Second quarter net sales were $27.1 million, up $4.7 million from 2005's $22.4 million.
Roller Bearing Segment
Net sales in the quarter were $23.4 million, up $1.8 million from $21.6 million in 2005.
Ball Bearing Segment
Second quarter net sales were $11.2 million, up $2.3 million from 2005's $8.9 million.
Other
Sales for the quarter were $3.6 million, from $3.4 million in 2005.
Demand is projected to continue strong into the third quarter, with sustainable gross margin
improvements. RBC forecast third quarter sales in the range of $61 million to $65 million,
and operating income between $9.8 million and $10.1 million. No guidance was offered
for third quarter net income.
Corresponding with the earnings release and news of the surprise net loss for the quarter, RBC
shares plummeted from the $16 range to set an all-time low at $14.20, before recovering to
approximately $15.50.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Bruce Carr edited this content.
Copyrighted material; unauthorized reproduction prohibited.
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Entire contents Copyright © 1999-2011, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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