QUOTE AND NEWS
Benzinga  Feb 12  Comment 
In a report published Wednesday, Bank of America analyst Kristine T. Liwag upgraded the rating on RBC Bearings (NASDAQ: ROLL) from Neutral to Buy, and raised the price target from $70.00 to $75.00. In the report, Bank of America noted, “We...
StreetInsider.com  Feb 12  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Upgrades/BofAMerrill+Lynch+Upgrades+RBC+Bearings+%28ROLL%29+to+Buy/9156324.html for the full story.
SeekingAlpha  Feb 6  Comment 
RBC Bearings Incorporated (ROLL) F3Q2014 Earnings Conference Call February 06, 2014 11:00 AM ET Executives Rory MacLellan – Investor Relations Michael J. Hartnett – Chairman, President and Chief Executive Officer Daniel A....
StreetInsider.com  Feb 6  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/RBC+Bearings+Inc.+%28ROLL%29+Misses+Q3+EPS+by+11c/9132986.html for the full story.
Benzinga  Jan 28  Comment 
Below are the small-cap machine tools & accessories stocks on the NYSE and the NASDAQ in terms of revenue. The trailing-twelve-month revenue at Blount International (NYSE: BLT) is $913.21 million. Blount's ROE for the same period is...
StreetInsider.com  Nov 7  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/RBC+Bearings+Inc.+%28ROLL%29+Misses+Q2+EPS+by+5c/8858162.html for the full story.
Benzinga  Oct 24  Comment 
RBC Bearings (NASDAQ: ROLL) shares gained 0.54% to touch a new 52-week high of $68.92. RBC Bearings' PEG ratio is 1.64. News Corporation (NASDAQ: NWSA) shares rose 1.11% to reach a new 52-week high of $17.30 after Guggenheim initiated coverage...
Benzinga  Oct 8  Comment 
In a report published Tuesday, Bank of America analyst Kristine T. Liwag downgraded the rating on RBC Bearings (NASDAQ: ROLL) from Buy to Neutral, but reiterated the $66.00 price target. In the report, Bank of America noted, “We are...
TheStreet.com  Oct 8  Comment 
NEW YORK (TheStreet) -- CHANGE IN RATINGS Alaska Air was downgraded at Deutsche Bank to hold from buy. $70 price target. Company is facing increased competition in key markets, Deutsche Bank said. Bristow was upgraded at Howard Weill...
StreetInsider.com  Aug 7  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Upgrades/Global+Hunter+Securities+Upgrades+RBC+Bearings+%28ROLL%29+to+Accumulate/8575076.html for the full story.




 

RBC Bearings (NYSE: ROLL) makes plain, roller, and ball bearings, and sells them to aerospace and industrial end markets. ROLL also competes with the machine tools oligopoly of Kennametal (KMT), Timken Company (TKR), and Stanley Works (SWK) by producing niche military parts, including bearings designed for U.S. military vehicles and weaponry.

ROLL has passed rigorous product examinations given by the U.S. Military. These credentials give ROLL military market power and opportunities for lucrative replacement parts sales. Besides the U.S. Military, ROLL sells bearings to other large customers, from Boeing to General Electric. Being dependent on large customers and two end markets means ROLL rises and falls with its customers. ROLL has also been affected by rising raw materials prices, particularly steel prices. Traditionally ROLL has passed on these costs to customers, a risky maneuver that may not be sustainable in the future.

Company Overview

Business Financials

In 2010, (ROLL's fiscal year ends April 3 of each year), ROLL had total revenues of $275 million, a decrease from the previous year's revenues of $356 million in 2009. Unsurprisingly, this negatively impacted its net income as well. For 2010, its net income was $24.4 million, a decline from its 2009 net income of $34.5 million.

Business Segments

Roll operates in three main segments: i) Plain Bearings, ii) Roller Bearings, and iii) Ball Bearings.

Plain Bearings (48.9% of 2010 sales)[1]

Plain Bearings correct the expected misalignments that occur in mechanical and aeronautical engineering. For example, when aeronautical vehicles face high pressure, plain bearings keep the structure rigid. These products are used in mining and construction equipment, missile launchers, and aircraft landing controls and landing gear. In 2010, this segment posted total revenues of $134 million.[1]

Roller Bearings (26.6% of 2010 sales)[1]

Tapered roller bearings can withstand heavy axial and radial forces, so they are ideal for trucks and aircrafts. Roller bearings are also used in aircraft hydraulics, military and commercial trucks, packaging machinery, and gear pumps. This segment earned a total of $73.2 million in 2010.[1]

Ball Bearings(16.6% of 2010 sales)[1]

Ball bearings are used for high-speed applications. Products are used for radar and night vision systems and semiconductor equipment. This segment posted total revenues of $45.4 million in 2010.[1]

Trends and Forces

ROLL competes in the machine tools industry with its niche military product line.

In the machine tools industry, RBC Bearings competes in an oligopoly against Timken Company (TKR), Stanley Works (SWK), and Kennametal (KMT). These three companies have pricing power and more capital for investments and acquisitions, so ROLL and other smaller cap companies, such as Kaydon (KDN) with wind energy products, find niche products to gain revenue. ROLL makes niche products in the military industry. ROLL passed rigorous military product examinations and these products have received increased demand for the Iraq War.

RBC's bearing products are used in several military applications, such as fighter jets, troop transports, naval vessels, helicopters, gas turbine engines, armored vehicles, guided weaponry and satellites. ROLL's advantage in the military market is that their bearing products are custom designed to conform to U.S. military specifications. Product approval for use on military equipment is a lengthy process ranging from six months to six years.[2] Such rigorous standards often makes ROLL the only producer of certain military products. ROLL's largest defense customers include the U.S. Department of Defense and all branches of the U.S. Military. Since ROLL is a producer of these unique products, it also replaces and repairs these unique products.

Rising steel prices cause ROLL to pass costs to consumers.

Steel is ROLL's primary material used in manufacturing, especially its aerospace bearings line. Nearly a quarter of the company's costs are for steel purchases. It takes ROLL up to three months to pass on costs to consumers through pricing and surcharges.[3] In periods of rapid price growth, such as from March 2006 to March 2008 when the average price of scrap metal has increased from $212.50/tonne to $500/tonne,[4] ROLL may see its costs rise faster than their ability to pass these onto customers.

Competition

Machine Tools & Accessories

  • Stanley Works (SWK)- SWK is a top brand of consumer and industrial tools.[5]
  • Timken Company (TKR)- TKR is the world's largest manufacturer of tapered roller bearings and a U.S. producer of steel alloy.[6]
  • Kennametal (KMT)- Leading global producer of tools, machine accessories, and advanced materials and second largest metal cutting tools manufacturer in the world.[7]
  • Kaydon (KDN)- KDN manufactures specialty bearings, especially bearings used for wind energy.
  • CompX International (CIX)- CIX manufactures security products and precision ball bearing slides.[8]
  • Hardinge (HDNG)- HDNG produces machine tools in Western Europe.
  • Thermadyne Holding (THMD)- THMD producers of gas and electric arc cutting and welding products for the Americas.
  • Flow International (FLOW)- Flow produces high-pressure waterjet cutting tools and had the highest revenue growth of machine tools companies in the past quarter.[9]

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 ROLL 10-K 2010 Item 1 Pg. 2
  2. RBC Bearings company website, "Investors"
  3. ROLL 2008 10-k, Item 1: Business, page 5
  4. Steel on the Net, "Steel Prices," 2008
  5. Stanley Works website, "Businesses"
  6. Timken Company website, "Corporate Overview"]
  7. KMT 2007 10-k, Item 6- Selected Financial Data, page 11
  8. Yahoo! Finance: CIX
  9. Yahoo! Finance: Machine Tools and Accessories Leaders and Laggards
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