RBC Bearings Incorporated

Ladies and gentlemen, thank you for standing by, and welcome to the RBC Bearings first quarter fiscal 2021 earnings conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Brooks Hamilton, Investory Lakeshore. Thank you. Please go ahead, sir.

Good morning. Thank you for joining us for RBC Bearings Fiscal 2021 First Quarter Earnings Conference Call. With me on the call today are Dr. Michael J. Hartnett, Chairman, President, and Chief Executive Officer, and Daniel A. Bergeron, Vice President, Chief Financial Officer, and Chief Operating Officer. Before beginning today's call, let me remind you that some of the statements made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected or implied due to a variety of factors. We refer you to RBC Bearings' recent filings with the SEC for a more detailed discussion of the risks that could impact the company's future operating results and financial conditions. These factors are also described in greater detail in the press release and on the company's website. In addition, reconciliation between GAAP and non-GAAP financial information is included as part of the release and is available on the company's website. Now I'll turn the call over to Dr. Hartnett.

Thank you, Brooks, and good morning, and welcome to RBC's first quarter fiscal 21 conference call. Net sales for the first quarter of fiscal 2021 were $156.5 million versus $182.7 million for the same period last year, a decrease of 14.3%. For the first quarter of 2021, sales of industrial products represented 37% of net sales with aerospace products at 63%. Gross margin for the quarter was $59.5 million or 38% of net sales. This compares to $70.7 million or 38.7% for the same period last year. Adjusted operating income was $29.9 million, 19.1% of net sales compared to last year's number of $38.5 million or 21.1% of sales. Adjusted EBITDA was $43.8 million and 28% of net sales compared to 50.8 million and 27.8% of net sales in the same period last year. And we ended up the quarter with 143.6 million of cash and 23.1 million of debt. We entered this quarter with limited visibility and uncertainty due to the impact of the pandemic on the economy and travel. We continued our extraordinary measures to protect the health and well-being of our employees We continue to operate all of our plants in a safe manner and experienced a few foreign plant mandatory shutdowns that lasted a few weeks at most. Sales of industrial products were down 13.3% from last year. The prime variance from last year fell in the natural resources markets Mining and Oil, and in general, industrial activity. Sales to the industrial aftermarket were down 12.3%, driven by the main industrial distributors in both the United States and Europe. A few quarters back, we discussed a few green shoots, which we started to see the benefit in Q1 this year, mainly in wind, SEMICON, military vehicles, and high-speed trains. Commercial and Defense First Quarter 2021 Net Sales were down 14.9%. Aerospace Defense OEM and Aftermarket increased 11.9%, offset by a decrease of 21.4% in Commercial Aircraft OEM and Aftermarket. Important contributors for Aerospace Defense were helicopters, engines, missiles, and airframes for jets. The uncertainty around commercial aircraft travel due to the pandemic continues to put pressure on the commercial aircraft builders and their supply chain. The major airframe producers appear to have a clearer view on the build rates over the next 12 plus months. That in turn is setting our requirements to meet their expectations. We continue reworking and fine-tuning our production schedules and capacity to align our supply of our products to the new demand levels. Regarding our second quarter, we are expecting sales to be between $148 and $152 million. And that is, of course, a difficult number to project. First of all, it's challenging to guess what the GDP is going to be in our second fiscal quarter, the third calendar quarter. I've seen industrial expansion numbers as high as 20% for this period. Much of our business is in and out the same day, and it never hits backlog. Basically, we really never have been in a forecasting situation like this, so we're trying to play the ball in the middle of the fairway as best we can, and hence we came up with that guidance. I'll now turn the call over to Dan for more detail on the financial performance.