Premium machine tools & accessories company, RBC Bearings Inc. ROLL reported robust results for first-quarter fiscal 2016. As per management, the sound quarterly results were driven by the company’s efficient operational model.
Earnings came in at 78 cents per share, up 13% year over year, also surpassing the Zacks Consensus Estimate of 74 cents.
Net sales of $142.3 million increased 25.9% year over year, beating the Zacks Consensus Estimate of $141 million. Though quarterly sales were negatively affected by foreign currency translation, the year-over-year improvement was attributable to higher aerospace and industrial sales.
RBC Bearings’ cost of sales during the quarter was $89.5 million, up 29.5% year over year, and representing 62.9% of aggregate revenue.
Adjusted gross margin decreased 10 basis points (bps) year over year to 38.7%. Total operating expenses were $30.4 million, up 55% year over year.
Exiting the quarter, backlog was $340.8 million versus $219.8 million as on Jun 28, 2014.
Other Financial Fundamentals
RBC Bearings exited the quarter with cash worth $61.6 million compared with $104.5 million on Jun 28, 2014. Total debt was $427.4 million, up from $10.3 million recorded in the year-ago comparable period.
In first-quarter fiscal 2016, RBC Bearings generated $22.2 million of cash from its operating activities, down from $26.9 million recorded in the prior-year quarter. Capital spending increased 51.1% year over year to $5.3 million.
Segmental Performance
Plain Bearings revenues were up 9.7% year over year to $65.7 million; while Roller Bearings sales fell 3.7% to $30.6 million. Ball Bearings sales were $12.8 million, down 5.4% year over year. Engineered Products sales totaled $33.2 million, up 7.8% year over year.
Outlook
RBC Bearings continues to project a positive outlook, expecting the benefits from the newly acquired Sargent Aerospace & Defense business as well as superior industrial sales to support growth in revenues and margin in the quarters ahead. The company also intends to enhance its earnings and backlogs on the back of greater operational efficiency, going forward.
Stocks to Consider
RBC Bearings currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Atlas Copco AB ATLKY, Graco Inc. GGG and Nordson Corporation NDSN. All three stocks carry a Zacks Rank #2 (Buy).
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