RBC Bearings(RBC) - 2025 Q1 - Quarterly Report

Part I - FINANCIAL INFORMATION This section provides the company's consolidated financial statements, management's discussion and analysis of financial performance, market risk disclosures, and internal controls assessment Item 1. Consolidated Financial Statements This section presents the unaudited interim consolidated financial statements for RBC Bearings Incorporated, including balance sheets, statements of operations, cash flows, and accompanying notes Consolidated Balance Sheets This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Consolidated Balance Sheet Highlights (in millions) | Account | June 29, 2024 | March 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $994.2 | $965.5 | | Total Assets | $4,696.5 | $4,678.6 | | Total Current Liabilities | $330.3 | $294.3 | | Total Liabilities | $1,892.6 | $1,926.7 | | Total Stockholders' Equity | $2,803.9 | $2,751.9 | Consolidated Statements of Operations This statement reports the company's revenues, expenses, and net income over a specific period, reflecting operational profitability Quarterly Statement of Operations (in millions, except per share data) | Metric | Three Months Ended June 29, 2024 | Three Months Ended July 1, 2023 | | :--- | :--- | :--- | | Net Sales | $406.3 | $387.1 | | Gross Margin | $184.0 | $167.9 | | Operating Income | $97.5 | $85.0 | | Net Income | $61.4 | $50.0 | | Net Income Attributable to Common Stockholders | $55.7 | $44.3 | | Diluted EPS | $1.90 | $1.52 | Consolidated Statements of Cash Flows This statement details the cash inflows and outflows from operating, investing, and financing activities over a specific period Quarterly Cash Flow Summary (in millions) | Cash Flow Activity | Three Months Ended June 29, 2024 | Three Months Ended July 1, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $97.4 | $61.7 | | Net cash used in investing activities | ($9.0) | ($6.5) | | Net cash used in financing activities | ($74.7) | ($63.6) | | Increase/(decrease) in cash | $13.3 | ($8.7) | | Cash and cash equivalents, at end of period | $76.8 | $56.7 | Notes to Financial Statements These notes provide additional details and explanations for the figures presented in the consolidated financial statements, including accounting policies and segment data Revenue by Segment (in millions) | Segment | Three Months Ended June 29, 2024 | Three Months Ended July 1, 2023 | | :--- | :--- | :--- | | Aerospace/Defense | $149.1 | $120.5 | | Industrial | $257.2 | $266.6 | | Total | $406.3 | $387.1 | - Total debt decreased to $1,131.4 million as of June 29, 2024, from $1,191.9 million as of March 30, 2024, primarily due to repayments on term loans[53] - The effective income tax rate was 23.1% for the quarter ended June 29, 2024, compared to 21.9% for the same period in the prior year. The rate without discrete items would have been 23.8% in the current quarter[54][55] - The company utilizes an interest rate swap to manage interest rate volatility on its variable-rate Term Loan. As of June 29, 2024, approximately 79% of the company's debt bears interest at a fixed rate after giving effect to the swap[60] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, operational results, segment performance, liquidity, capital resources, and future outlook for the first quarter of fiscal 2025 - The company's strategy focuses on developing innovative solutions, expanding its customer base, increasing aftermarket sales, and pursuing selective acquisitions[66][67] - The company expects net sales to be between $395.0 million and $405.0 million for the second quarter of fiscal 2025, representing a 2.4% to 5.0% increase year-over-year[70] Results of Operations This section analyzes the company's financial performance, including net sales, gross margin, and operating expenses, for the reported period Q1 FY2025 vs Q1 FY2024 Performance Summary (in millions) | Metric | Q1 FY2025 | Q1 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Total Net Sales | $406.3 | $387.1 | 5.0% | | Gross Margin | $184.0 (45.3%) | $167.9 (43.4%) | 9.6% | | SG&A | $67.6 (16.6%) | $64.7 (16.7%) | 4.5% | | Interest Expense, Net | $17.2 | $20.5 | (16.1)% | - The increase in gross margin percentage to 45.3% was driven by manufacturing efficiencies and a favorable product mix in both the Industrial and Aerospace/Defense segments[75] - The decrease in net interest expense was directly related to debt reduction efforts over the past fiscal year[79] Segment Information This section provides a detailed breakdown of financial performance by the company's key operating segments, Aerospace/Defense and Industrial Aerospace/Defense Segment Performance (in millions) | Metric | Q1 FY2025 | Q1 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $149.1 | $120.5 | 23.7% | | Gross Margin | $63.1 | $47.3 | 33.4% | | Gross Margin % | 42.3% | 39.3% | N/A | - Aerospace/Defense sales growth was driven by a 17.3% increase in commercial aerospace (OEM and aftermarket) and a 38.1% increase in defense markets (marine, helicopters, and missiles)[82] Industrial Segment Performance (in millions) | Metric | Q1 FY2025 | Q1 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $257.2 | $266.6 | (3.5)% | | Gross Margin | $120.9 | $120.6 | 0.2% | | Gross Margin % | 47.0% | 45.2% | N/A | - The Industrial segment saw a sales decrease against a strong prior-year comparable, with strength in food & beverage and mining offset by weakness in semiconductor and oil & gas. Gross margin improved due to product mix and manufacturing efficiencies[84][85] Liquidity and Capital Resources This section assesses the company's ability to meet its financial obligations and fund operations, detailing cash position, borrowing capacity, and cash flow activities - As of June 29, 2024, the company had $76.8 million in cash and cash equivalents and an additional $478.3 million available for borrowing under its Revolving Credit Facility[90][95] - Net cash from operating activities increased to $97.4 million in Q1 FY2025 from $61.7 million in Q1 FY2024, driven by higher net income and favorable changes in operating assets and liabilities[102] - Capital expenditures were $9.0 million for the quarter, with an additional $40.0 to $50.0 million planned for the remainder of fiscal 2025[107] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from changes in interest rates and foreign currency exchange rates. Interest rate risk on variable-rate debt is partially mitigated by an interest rate swap, resulting in approximately 79% of debt having a fixed rate. Foreign currency risk arises from operations in multiple countries, with about 11% of net sales impacted by currency fluctuations - The company uses an interest rate swap to manage exposure to interest rate fluctuations on its Term Loan. As of June 29, 2024, approximately 79% of total debt is at a fixed rate[111] - Approximately 11% of net sales were impacted by foreign currency fluctuations. A strengthening U.S. dollar could reduce reported net sales, operating profit, and shareholders' equity from foreign operations[111] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 29, 2024. No material changes to internal control over financial reporting occurred during the quarter - The CEO and CFO concluded that as of June 29, 2024, the company's disclosure controls and procedures were effective[113] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[114] Part II - OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity security sales, and exhibits Item 1. Legal Proceedings There were no new reportable legal proceedings or material developments in previously disclosed proceedings during the quarter - No reportable legal proceedings or material developments occurred during the quarter[115] Item 1A. Risk Factors There have been no material changes to the company's risk factors since the filing of its Annual Report on Form 10-K on May 17, 2024 - No material changes to risk factors were reported since the last Annual Report[116] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's repurchase of its own equity securities during the first quarter of fiscal 2025. A total of 27,208 shares were repurchased at an average price of $295.17 per share, leaving approximately $52.3 million available under the current repurchase program Issuer Purchases of Equity Securities (Q1 FY2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Value Remaining for Purchase (millions) | | :--- | :--- | :--- | :--- | | Total Q1 | 27,208 | $295.17 | $52.3 | Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to SEC rules and Inline XBRL documents[120]