UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 1, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-40840

RBC BEARINGS INCORPORATED
(Exact name of registrant as specified in its charter)

Delaware		95-4372080
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Tribology Center Oxford, CT		06478
(Address of principal executive offices)		(Zip Code)

(203) 267-7001
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	ROLL	Nasdaq NMS
5.00% Series A Mandatory Convertible Preferred Stock, par value $0.01 per share	ROLLP	Nasdaq NMS

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of February 4, 2022, RBC Bearings Incorporated had 28,876,359 shares of Common Stock and 4,600,000 shares of Preferred Stock outstanding.

TABLE OF CONTENTS

Part I -	FINANCIAL INFORMATION	1

Item 1.	Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
	Changes in Internal Control over Financial Reporting	34

Part II -	OTHER INFORMATION	35

Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38

Part I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

RBC Bearings Incorporated

Consolidated Balance Sheets

(dollars in thousands, except per share data)

	January 1, 2022			April 3, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	255,503		$	151,086
Marketable securities		—			90,249
Accounts receivable, net of allowance for doubtful accounts of $2,619 as of January 1, 2022 and $1,792 as of April 3, 2021		199,785			110,472
Inventory		510,175			364,147
Prepaid expenses and other current assets		21,774			12,248
Total current assets		987,237			728,202
Property, plant and equipment, net		396,164			208,264
Operating lease assets, net		42,816			35,664
Goodwill		1,886,874			277,536
Intangible assets, net		1,524,715			154,399
Other noncurrent assets		37,244			30,195
Total assets	$	4,875,050		$	1,434,260

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	140,374		$	36,336
Accrued expenses and other current liabilities		131,169			43,564
Current operating lease liabilities		7,974			5,726
Current portion of long-term debt		63,519			2,612
Total current liabilities		343,036			88,238
Long-term debt, less current portion		1,726,734			13,495
Long-term operating lease liabilities		35,076			29,982
Deferred income taxes		307,819			17,178
Other noncurrent liabilities		127,411			55,416
Total liabilities		2,540,076			204,309

Stockholders’ equity:
Preferred stock, $.01 par value; authorized shares: 10,000,000 as of January 1, 2022 and April 3, 2021, respectively; issued shares: 4,600,000 and 0 as of January 1, 2022 and April 3, 2021, respectively		46			—
Common stock, $.01 par value; authorized shares: 60,000,000 as of January 1, 2022 and April 3, 2021, respectively; issued shares: 29,798,240 and 26,110,320 as of January 1, 2022 and April 3, 2021, respectively		298			261
Additional paid-in capital		1,531,552			445,073
Accumulated other comprehensive loss		(10,896	)		(10,409	)
Retained earnings		885,456			858,852
Treasury stock, at cost, 923,340 shares and 884,701 shares as of January 1, 2022 and April 3, 2021, respectively		(71,482	)		(63,826	)
Total stockholders’ equity		2,334,974			1,229,951
Total liabilities and stockholders’ equity	$	4,875,050		$	1,434,260

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Operations

(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	January 1, 2022			December 26, 2020			January 1, 2022		December 26, 2020
Net sales	$	266,953		$	145,861		$	584,058	$	448,689
Cost of sales		173,608			90,273			364,476		277,052
Gross margin		93,345			55,588			219,582		171,637
Operating expenses:
Selling, general and administrative		43,196			25,739			102,672		78,591
Other, net		35,778			3,308			44,693		11,328
Total operating expenses		78,974			29,047			147,365		89,919
Operating income		14,371			26,541			72,217		81,718
Interest expense, net		11,848			327			27,937		1,095
Other non-operating (income)/expense		1,395			(50	)		639		203
Income before income taxes		1,128			26,264			43,641		80,420
Provision for income taxes		1,191			4,695			10,776		15,741
Net income/(loss)		(63	)		21,569			32,865		64,679
Preferred stock dividends		5,751			—			6,261		—
Net income/(loss) available to common stockholders	$	(5,814	)	$	21,569		$	26,604	$	64,679

Net income/(loss) per share available to common stockholders:
Basic	$	(0.20	)	$	0.87		$	1.01	$	2.61
Diluted	$	(0.20	)	$	0.86		$	1.00	$	2.59
Weighted average common shares:
Basic		28,618,495			24,861,792			26,379,984		24,816,451
Diluted		28,618,495			25,060,812			26,663,990		24,985,848

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Comprehensive Income/(Loss)

(dollars in thousands)

(Unaudited)

	Three Months Ended					Nine Months Ended
	January 1, 2022			December 26, 2020		January 1, 2022			December 26, 2020
Net income/(loss)	$	(63	)	$	21,569	$	32,865		$	64,679
Pension and postretirement liability adjustments, net of taxes ⁽¹⁾		318			260		954			779
Foreign currency translation adjustments		(1,951	)		3,823		(1,441	)		5,609
Total comprehensive income/(loss)	$	(1,696	)	$	25,652	$	32,378		$	71,067

⁽¹⁾

These adjustments were net of tax expense of $82 and $79 for the three-month periods ended January 1, 2022 and December 26, 2020, respectively and $247 and $237 for the nine-month periods ended January 1, 2022 and December 26, 2020, respectively.

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Stockholders’ Equity

(dollars in thousands)

(Unaudited)

	Common Stock					Preferred Stock				Additional Paid-in			Accumulated Other Comprehensive			Retained			Treasury Stock						Total Stockholders’
	Shares			Amount		Shares		Amount		Capital			Income/(Loss)			Earnings			Shares			Amount			Equity
Balance at April 3, 2021		26,110,320		$	261		—	$	—	$	445,073		$	(10,409	)	$	858,852			(884,701	)	$	(63,826	)	$	1,229,951
Net income		—			—		—		—		—			—			25,999			—			—			25,999
Share-based compensation		—			—		—		—		5,772			—			—			—			—			5,772
Repurchase of common stock		—			—		—		—		—			—			—			(31,572	)		(6,264	)		(6,264	)
Exercise of equity awards		135,518			2		—		—		16,679			—			—			—			—			16,681
Change in net prior service cost and actuarial losses, net of tax expense of $83		—			—		—		—		—			318			—			—			—			318
Issuance of restricted stock, net of forfeitures		91,056			—		—		—		—			—			—			—			—			—
Currency translation adjustments		—			—		—		—		—			1,919			—			—			—			1,919
Balance at July 3, 2021		26,336,894		$	263		—	$	—	$	467,524		$	(8,172	)	$	884,851			(916,273	)	$	(70,090	)	$	1,274,376
Net income		—			—		—		—		—			—			6,929			—			—			6,929
Share-based compensation		—			—		—		—		6,224			—			—			—			—			6,224
Preferred stock issuance, net of issuance costs		—			—		4,600,000		46		445,407			—			—			—			—			445,453
Common stock issuance, net of issuance costs		3,450,000			35		—		—		605,642			—			—			—			—			605,677
Preferred stock dividends		—			—		—		—		—			—			(510	)		—			—			(510	)
Repurchase of common stock		—			—		—		—		—			—			—			(406	)		(92	)		(92	)
Exercise of equity awards		1,332			—		—		—		131			—			—			—			—			131
Change in net prior service cost and actuarial losses, net of taxes of $82		—			—		—		—		—			318			—			—			—			318
Issuance of restricted stock, net of forfeitures		(1,064	)		—		—		—		—			—			—			—			—			—
Currency translation adjustments		—			—		—		—		—			(1,409	)		—			—			—			(1,409	)
Balance at October 2, 2021		29,787,162		$	298		4,600,000	$	46	$	1,524,928		$	(9,263	)	$	891,270			(916,679	)	$	(70,182	)	$	2,337,097
Net income/(loss)		—			—		—		—		—			—			(63	)		—			—			(63	)
Share-based compensation		—			—		—		—		6,038			—			—			—			—			6,038
Preferred stock dividends		—			—		—		—		—			—			(5,751	)		—			—			(5,751	)
Repurchase of common stock		—			—		—		—		—			—			—			(6,661	)		(1,300	)		(1,300	)
Exercise of equity awards		9,759			—		—		—		905			—			—			—			—			905
Change in net prior service cost and actuarial losses, net of taxes of $82		—			—		—		—		—			318			—			—			—			318
Issuance of restricted stock, net of forfeitures		1,319			—		—		—		—			—			—			—			—			—
Preferred stock issuance, net of issuance costs		—			—		—		—		(134	)		—			—			—			—			(134	)
Common stock issuance, net of issuance costs		—			—		—		—		(185	)		—			—			—			—			(185	)
Currency translation adjustments		—			—		—		—		—			(1,951	)		—			—			—			(1,951	)
Balance at January 1, 2022		29,798,240		$	298		4,600,000	$	46	$	1,531,552		$	(10,896	)	$	885,456			(923,340	)	$	(71,482	)	$	2,334,974

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Stockholders’ Equity (continued)

(dollars in thousands)

(Unaudited)

	Common Stock					Additional Paid-in		Accumulated Other Comprehensive			Retained		Treasury Stock						Total Stockholders’
	Shares			Amount		Capital		Income/(Loss)			Earnings		Shares			Amount			Equity
Balance at March 28, 2020		25,881,415		$	259	$	412,400	$	(6,898	)	$	769,219		(838,982	)	$	(56,981	)	$	1,117,999
Net income		—			—		—		—			22,689		—			—			22,689
Share-based compensation		—			—		5,438		—			—		—			—			5,438
Repurchase of common stock		—			—		—		—			—		(31,179	)		(4,391	)		(4,391	)
Exercise of equity awards		4,200			—		231		—			—		—			—			231
Change in net prior service cost and actuarial losses, net of taxes of $79		—			—		—		260			—		—			—			260
Issuance of restricted stock, net of forfeitures		56,157			—		—		—			—		—			—			—
Currency translation adjustments		—			—		—		409			—		—			—			409
Balance at June 27, 2020		25,941,772		$	259	$	418,069	$	(6,229	)	$	791,908		(870,161	)	$	(61,372	)	$	1,142,635
Net income		—			—		—		—			20,421		—			—			20,421
Share-based compensation		—			—		5,231		—			—		—			—			5,231
Repurchase of common stock		—			—		—		—			—		(62	)		(8	)		(8	)
Exercise of equity awards		31,200			1		2,188		—			—		—			—			2,189
Change in net prior service cost and actuarial losses, net of taxes of $79		—			—		—		259			—		—			—			259
Issuance of restricted stock, net of forfeitures		(2,299	)		—		—		—			—		—			—			—
Currency translation adjustments		—			—		—		1,377			—		—			—			1,377
Balance at September 26, 2020		25,970,673		$	260	$	425,488	$	(4,593	)	$	812,329		(870,223	)	$	(61,380	)	$	1,172,104
Net income		—			—		—		—			21,569		—			—			21,569
Share-based compensation		—			—		5,173		—			—		—			—			5,173
Repurchase of common stock		—			—		—		—			—		(10,873	)		(1,807	)		(1,807	)
Exercise of equity awards		40,199			—		3,685		—			—		—			—			3,685
Change in net prior service cost and actuarial losses, net of taxes of $79		—			—		—		260			—		—			—			260
Issuance of restricted stock, net of forfeitures		226			—		—		—			—		—			—			—
Currency translation adjustments		—			—		—		3,823			—		—			—			3,823
Balance at December 26, 2020

SEC Form 10-Q filed by RBC Bearings Incorporated