RBC Bearings Incorporated

Good morning, ladies and gentlemen, and welcome to the RBC Bearings Fiscal 2021 Second Quarter Earnings Conference Call. At this time, all the participant lines are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then divert on your touchtone telephone. As a reminder, this conference call is being recorded. I would like to turn the conference over to your host, Michael Cummings, with Alpha IR. Please go ahead.

Good morning, and thank you for joining us for RBC Barron's fiscal 2021 second quarter earnings conference call. With me on the call today are Dr. Michael J. Hartnett, Chairman, President, and Chief Executive Officer, Daniel A. Bergeron, Director, Vice President and Chief Operating Officer, and Robert Sullivan, Vice President and Chief Financial 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. Usher results may differ materially from those projected or implied due to a variety of factors. We refer you to RBC Barron's recent filings with the SEC for a more detailed discussion of the risks that could impact a 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, Mike, and good morning, and welcome to the RBC conference call. Net sales for the second quarter of fiscal 2021 were 146.3 million versus 181.9 million for the same period last year, a decrease of 19.6%. For the second fiscal quarter of 2021, sales of industrial products represented 40% of our net sales. Aerospace products represented 60%. Adjusted gross margins for the quarter were 58.6 percent or 40 percent of net sales. This compares to 71.2 million or 39.1 percent for the same period last year. Adjusted operating income was 29.9 million, 20.4 percent of net sales compared to last year of 38.4 million and 21 percent of net sales. Again, we penetrated the 40% gross margin level on a consolidated basis, and we're very happy about that. Adjusted EBITDA was 43.5 million, 29.8% of net sales compared to 51.2 million and 28.2% of net sales for the same period last year. We ended the quarter with 166.4 million in cash and 20.4 million of debt. We entered the second quarter with better visibility on demand but continued uncertainty due to the impact of the pandemic on our overall business. The extraordinary measures we used to protect the health and well-being of our employees and vendors remained in place and were enhanced where needed. We continue to operate our plants with minimal impact on health and safety of our employees. Sales of industrial products were down 8.3% from last year. The prime variance from last year continues to fall in the natural resources markets of mining and oil. Sales to the industrial aftermarket to industrial distributors were down 4.8% in both the United States and Europe. We see continuing strength in demand from producers of equipment for wind energy, semiconductor fabrication, military vehicles, high-speed trains, and space. Industrial sales were up sequentially 22.9% over the period. Distribution in that measure was up 10.2%. Good news there is the economy recovers. Aerospace commercial and defense second quarter fiscal 2021 Net sales contracted 25.8%. Aerospace defense OEM and aftermarket increased 28.3%, offset by a decrease of 24.4% in commercial aircraft OEM and aftermarket. Important drivers for aerospace defense continues to be for helicopters, engines, missiles, and space. The outlook for commercial aircraft travel is still not clear. pressure on commercial aircraft builders and supply chain remains, and we continue reworking and fine-tuning our production schedules and capacity to align our supply of products to the new demand levels. We are using the time and our resources wisely while the aircraft business remains in the doldrums. We're developing products for future portfolios and making good progress doing that. We expect to supply more of the commercial airplane content in the future, develop our offering further for space and high priority defense systems, and work through plant consolidation projects, which is our current agenda topics. These are projects we couldn't fully address when our priorities to expand our production capacity were paramount. With regard to our third quarter, we are expecting sales to be between $140 million and $145 million. I'll now turn the call over to Dan for more detail on the financial performance.