RBC Bearings Incorporated

Good day, ladies and gentlemen. Thank you for standing by. And welcome to the RPC Bearing second quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After this week's presentation, there will be a question and answer session. So as a question during the session, you will need to press the star then the one key on your touch-tone telephone. Please be advised that today's conference is being recorded. If you recall our resistance, please press star then zero. I would now like to hand the conference over to your speaker host, Michael Cummings with Alpha IR. Please go ahead.

Good morning, and thank you for joining us for RBC Barron's fiscal 2022 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 and Reform Act of 1995. Actual results may differ maturely from those projected or implied due to a variety of factors. We refer you to RBC Bearing'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 condition. 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 to all. And welcome to the second quarter fiscal 22 conference call for RBC Bearings. Net sales for the second quarter of fiscal 22 were 160.9 million versus 146.3 million for the same period last year, an increase of about 10%. For the second quarter, sales of industrial products represented 48% of our net sales, and aerospace products represented 52%. Adjusted gross margin for the quarter was 63.4 million, or 39.4% of net sales. This compares to 58.6 million, or 40%, for the same period last year. Adjusted operating income was 30.5 million, 19% of net sales, compared to last year, 29.9 million, 20.4% of net sales. Adjusted EBITDA was 45.4 million, 28.2% of net sales, compared to $43.5 million and 29.8% of net sales for the same period last year. And we ended the quarter with $1,346,000,000 of cash and $7.6 million of debt. Demand from the industrial markets maintained an extremely strong performance during the period and showed increasing strength as the quarter ended. with important markets gaining new strength towards the end of the period. Our industrial OEM business showed a year-to-year expansion of 31% over last year. The industrial aftermarket continued to expand, showing a gain of 26.4% over last year, while OEM expansion hovered around 33.4% for the period. We saw demand ranging from excellent to extraordinary, and most markets served, and we look forward to additional strengthening from some of these markets as we see for the balance of the year. Relative to Dodge, their year-to-date performance was up 22.5% over last year, and orders continue to outpace sales. We are expecting a good showing here and in our fourth quarter. very happy on how their markets are performing and their manufacturing plants are keeping up with demand. Turning to the aerospace and defense markets, they contracted 4.4% for the quarter. Defense showed a gain of 11% for the period, offset by OEM, which was off 7.7%. We are now seeing increases in orders shippable later in the year across all of our locations that service and supply both Boeing and Airbus as well as their subcontractors. It appears that we are about complete with the inventory hangover created by the abrupt halt of production on the MAX and are seeing a substantial pickup in our order book for commercial aircraft components for both major plane producers deliverable beginning in our fourth quarter. In fact, backlog for this sector is up $50 million over last year, which is really a great sign. Our gross margins under more or less steady state conditions, we would have expected margins to be a point or more higher. We are not operating, however, under steady state conditions today. In the second quarter, we added additional costs to the plants supporting commercial aircraft production in order to step up our capacity to support the demand, which we'll see in early next calendar year. This created an overhead absorption variance, degrading our margins slightly. It is what it is and it's something that we had to do in order to step up to support this additional demand that we see coming very quickly. Secondly, we've been adding staff to absorb the Dodge acquisition in order to support the services supplied by the previous owner, ABB. And last, there was a variance on tax considerably impacting the effective rates that Rob will explain later in the call. Regarding the third quarter, we expect sales to be somewhere between $245 and $250 million, and we're expecting a very strong fourth quarter with contributions from both the industrial and the aerospace markets. I'll now turn the call over to Rob for more detail on the financial performance.