RBC Bearings Incorporated

Good morning, ladies and gentlemen, and welcome to the Q1 2022 RBC Bearings Earnings Conference Call. At this time, all participants 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 zero, on your touchstone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Will Stack with Investor Relations.

Good morning, and thank you for joining us for RBC Bearing's Fiscal 2022 First 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 Behring'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, and good morning and welcome to all. It seems like we're having these calls weekly now. It's just a pleasure to speak to everyone every week. Net sales for the first quarter of fiscal 22 were $156.2 million versus $156.5 million for the same period last year, a decrease of 0.2%. We had some delays in shipments in one of our divisions as a result of source inspection, which is beyond our control, so that's where we are. For the first fiscal quarter of 22, Sales of industrial products represented 48% of net sales, with aerospace products at 52%. Gross margin for the quarter was $63.8 million, or 40.8% of net sales. This compares to $59.5 million, or 38% for the same period last year. Adjusted operating income was $31.3 million, 20% of net sales compared to last year's 19.1%. Adjusted EBITDA was $45.3 million, 29% of net sales, compared to $43.8 million and 28% of net sales for the same period last year. We ended the quarter with $296 million in cash and securities and $10.8 million of debt. The quarter was one where the industrial markets continued to show increasing strength. Our industrial OEM businesses, non-marine, demonstrated a quarter-to-quarter bounce of 42% over last year. Demand was strong in virtually all components of the market except oil and gas, but the latter appears to be making a comeback now in the July quarter. Performance in the industrial aftermarket was almost as impressive with a 32.6% expansion over last year. We saw demand ranging from excellent to extraordinary in most markets served, and we are looking forward to a strong second quarter from the industrial businesses and expect a continuing but some moderation in demand through the balance of the year. Our strong industrial markets were construction and mining, industrial distribution, semiconductor machinery, machine tool, wind, and trains. Turning to aerospace and defense, this sector was off 18.3 percent for the quarter. Sequentially, when normalized for production days, it was about flat with the preceding period. Aircraft OEM was down almost 22.5 percent. This can be almost entirely attributed to the slow ramp of the 737 MAX programs through 21 and into calendar year 22. a problem that should resolve itself in the quarters ahead as Boeing steps through their monthly production rates from today's 17 per month to January of 2023 of 42 per month. We are now seeing increases in orders shippable later in the year across all of our plants that service and supply both Boeing and Airbus. Today we are combing through over 2,000 line items, excuse me, bearings and assemblies we supply to the industry to ensure we have materials, logistics, and staff in place to seamlessly support the next two years of build rate increases. Regarding our second quarter, we are expecting sales to be between $158 and $162 million. And I'll now turn the call over to Dan and Rob for more detail on the financial performance.