RBC Bearings Inc. (USA; NASDAQ: ROLL) reported financial results for fiscal second quarter 2008, ended September 29, 2007.

Sales in the quarter were USD $78.2 million, up 7% from 2007's $73.2 million.

Aerospace bearing sales in the quarter accounted for 50% of RBC's total sales. However, all of its key markets -- construction and mining, oil, defense, aerospace and airframe -- have been growing to the point where their demands have stretched both infrastructure and staffing.

The continued soft Class 8 heavy truck market knocked the quarter's sales increase down by almost 3%, or approximately $10 million from 2007. However, a year ago, sales to the Class 8 truck market had been artificially high, as buyers accelerated truck purchases in advance of 2007's more restrictive engine regulations. By this time next year, the company said Class 8 bearing sales should be strong again as truck demand returns to normal.

Gross margin was $26.2 million (33.5% of sales), up 12% from 2007's $23.5 million (32.1% of sales).

RBC said its margin was slightly impacted by the costs and time lost moving API aerospace bearing production from an elderly Torrington plant to its newly-built home several miles away. That same move also cost approximately $2 million in lost or shifted sales from second quarter.

SG&A was up slightly, to $11.9 million (15.2% of sales) from last year's $10.6 million (14.5% of sales); RBC attributed the spike to its two recent acquisitions, plus the need to boost engineering and customer service staff headcount to meet higher customer demand.

Net income for the quarter was $14.0 million, up 11% from 2007's $12.6 million.

RBC divides its business into four segments:


Roller bearings segment reported second quarter 2008 sales of $23.1 million, down slightly from $23.4 million in the same period of 2007.

Plain bearings segment reported second quarter 2008 sales of $36.1 million, up from $33.1 for the same period in 2007.

Ball bearings segment reported second quarter 2008 sales of $13.8 million, from $12.2 million in 2007.

Other grew to $5.1 million from $4.7 million.


While six-month capex a year ago was lagging depreciation and amortization ($4.6 million to $4.9 million), this year's first six months have seen capex jump to $11.2 million, primarily due to the new aerospace facility construction, while D&A held at $4.9 million. Capex to D&A is important in manufacturing, as it indicates a company's willingness to invest in its own future. Generally, RBC said its capex is 30% toward maintenance and 70% toward facilities.

RBC President, Chairman and CEO, Michael Hartnett, said: "We are pleased to report another solid quarter, as the summer period always presents its special challenges. Our core business in aircraft, defense and some of the industrial sectors showed continued strength and our incoming orders reflected this as backlog expanded to $191.2 million. The net income increase of nearly 19% (sic; non-GAAP) from the same period last years and nearly 50% (sic; non-GAAP) in the six months ended September 29, 2007, demonstrates the continued improvement of our internal operations."

Joining the manufacturing bandwagon, responding to higher worldwide demand for large industrial bearings and wind power bearings, RBC announced it now has a 30-month plan for moving faster in that direction. Budgeting related capex of $25 to $30 million, the result will be additional large-bearing capacity at plants in Texas, South Carolina, and Mexico. The investments will be phased, with $15 million coming in relatively quickly, then an evaluation period before committing the remainder.