RBC Bearings Incorporated

Good day, and thank you for standing by. Welcome to the RBC Barings Fiscal 2021 Fourth Quarter Earnings Call. At this time, all participants are in 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, then 1 on your telephone keypad. Please be advised that today's conference may be recorded. If you require any further assistance, please press star, then 0 to reach an operator. I'd now like to hand the conference over to your host today, Mr. Will Stack with Alpha IR. Please go ahead.

Good morning, and thank you for joining us for RBC Bearing's fiscal 2021 fourth 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. Actual 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 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, Will. Good morning and welcome. Net sales for the fourth quarter of fiscal 2021 were $160.3 million. versus $185.8 million for the same period last year, a decrease of 13.7%. For the fourth quarter of 2021, sales of industrial products represented 47% of our net sales, with aerospace products at 53%. The gross margin for the quarter was $62.5 million, or 39% of net sales, This compares to 76.6 million or 41.2% for the same period last year. Operating income was 29.7 million, 18.6% of net sales compared to last year's 43.5 million or 23.4% respectively. Adjusted EBITDA was 45.9 million, 28.6% of net sales compared to 56.3 million and 30.3% of net sales for the same period last year. We ended the quarter with $241.3 million of cash and securities and $16.1 million of debt. Year-to-date free cash flow was a record $140.7 million. We entered the fourth quarter and saw a substantial strengthening of our industrial sector. All markets participated, industrial distribution, mining, machine tool, rail, semiconductor machinery, marine, and wind. We also saw a substantial increase in quoting and contract activity from the aerospace sector. Sales of industrial products were up 12.9% from last year, led by OEM, which was up 15.1%. Sequential quarter comparisons show industrials were up by 16.8%, led by a distribution at 21.3%. Industrial distribution gave a very strong showing during the period across all product lines and geographies. In fact, we could have sold more if we had stock in many of the mixed items. We are busy today on inventory replenishment and increasing many key stocking positions. Marine, the build out of the Virginia and Columbia submarine fleets continue. We have completed block four build out of the Virginia class and are starting the next ten boat contract this month. We are also preparing for the Columbia to begin production cycle in calendar year 22. On semiconductor, the race to expand semiconductor manufacturing is driving requirements for machinery and components at levels we haven't experienced before. As you know, this is driven by a demand for computers and automobiles, phones, games, self-driving cars, 5G technology, et cetera. Over the past 20 years, we have diligently built out very strong positions with the machine builders and achieved considerable design excellence, manufacturing scale, and reputation in these markets. We are now realizing the benefits of all these efforts. Turning to aerospace and defense, the fourth quarter fiscal 2021 net sales were down 28.6% on a quarter-over-quarter basis, but up sequentially 4.5%. Boeing is slowly increasing demand for product for the 737 MAX suppliers as they consume their excess inventory positions. We are pleased to see the turnaround in consumption here and expect each quarter to be better than the last going forward. We are planning to support a 140 to 150 plane build out this year, moving to 350 to 400 737 MAXs next year. Given the new rules for vaccinated travelers to Europe, we expect to see an improved outlook for the 777 and the 787 ships and their build rates by the end of the summer or sooner. We are currently supporting audits of our production capacities by both Boeing and Airbus personnel as they lay plans to build to increase their production rates. Airbus currently at 40 to 42 A320 series per month is targeted to their well-known goal of 60 ships per month. As reported earlier, the plan is to build 800 total ships of all designs in 2022. Space. Moving to space. As the claim spaces the new aerospace, we are active with many of the daily headline names supplying components as diverse as bearings for rocket engines, fins for directional control, structures for landing gear, actuation devices, low-friction cryogenic components. The pace is always fast in the development path, normally uncertain, but we like where this is going and doing whatever we can so that we're not the bottleneck on the process of landing a man on Mars. This can develop into a significant business scale for RBC if the plans of the significant entrepreneurs are realized over the next few years. More of this on future calls. And finally, defense. We certainly have a dream portfolio in terms of platform composition and outlook and expect continuous strength from this sector for many years. Regarding our fourth quarter, we are expecting sales to be between 154 and 158 million. It's a little bit hard to predict these numbers today, and I'm sure that we'll be talking about that more later in the call, so I'll I'll defer to that discussion and I'll now turn the call over to Dan and Rob for more detail on the financial performance.