RBC Bearings Incorporated

Hello, and welcome to the RBC Barings Q1 Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Josh Carroll, Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and thank you for joining us for RPC Barron's fiscal 2023 first quarter earnings conference call. With me on the call today is 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 condition. These factors are also described in greater detail in the press release and on the company's website. In addition, reconciliation GAAP and non-GAAP financial information is included as part of the release and is available on the company's website. With that, I'll now turn the call over to Dr. Hardman.

Thank you, Josh, and good morning, all. I'll start off by saying that net sales for the first quarter of fiscal 23 were $354.1 million versus $156.2 million for the same period last year. an increase of 126 percent. For the first quarter of 23, sales of industrial products represented 72 percent of net sales, aerospace products 28 percent. Gross margin for the quarter was 141.2 million, 39.9 percent of net sales, compares to 63.8 million or 40.8 percent for the same period last year. Adjusted operating income was 68.3 million, 19.3% of net sales compared to last year of 29.9 million and 19.1% respectively. Gap EPS was $1.09, and new adjusted EPS came in at $1.79, and Rob will explain this in more detail later in the call. The quarter performance was very much in compliance with our expectations, right in the middle of the fairway. a little lower on revenues than our guidance as a result of losing six to $10 million from the shutdown of our Shanghai China plant and some unusual missteps by a forward freight manager. Adjusted EBITDA offer was 100.7 million, 28.4% of net sales compared to 45.3 million, 29% of net sales for the same period last year. During the period we paid down debt by another $125 million, and free cash flow was $51.2 million. We entered the first quarter with a strong industrial sector. All components, including industrial distribution, food, aggregate, grain, mining, semiconductor, machinery, marine, wind, energy, were strong, and the outlook here is more of the same for the next quarter. Sales of industrial products were up by 286.8% from last year. RBC organic growth for industrial products was up 17.3%. Turning now to aerospace and defense, the first quarter of fiscal 23, net sales were up 10%. The revival in production at Boeing is a welcome contributor as their plans to increase rates on the max to over 500 and 600 ships in 23 and 24 respectively from 330 today. And Airbus sets a new pace of 700 and 800 ships for the A320 series over the same period. Today, they plan on producing 600 ships. This brings a new and welcome post-COVID volume to our factories. many of which were designed and capitalized over the past half dozen years to efficiently produce products for these important aircraft models. As many of you already know, RBC Bearings was honored to receive the Supplier of the Year Award from Boeing at their June supply chain conference in Los Angeles. We have been a supplier to Boeing since the 1940s, probably earlier, and participate in every plane model currently produced and a great many defense products. Boeing commercial aircraft is supported today by over 11,000 suppliers. The release to production of the Boeing 787 model aircraft is an important milestone event for us. Several of our plants produce many unique products for this plane, and our content is substantial. Obviously, we are applauding the resumption of production of this aircraft and are busy now reviewing plant capacity to support the increase. We are using 10 ships per month in 24 months out as a planning bogey. A word on our defense business. The outlook here is positive for new designs, hardware, and services, new designs for advanced munitions, aircraft, and submarines with expanded mission profiles. It's very active right now, and it's a pretty exciting place to work. Our business supporting the construction of Virginia and Columbia ships continues to expand, and we plan to add to our manufacturing and test facilities over the next 24 months to support these requirements for the next at least dozen years. More on this aspect in future calls. Finally, given the deployment of U.S.-made equipment to Europe in the past months, there's been a strong initiative underway here. for replenishment of munitions, as you can imagine. We will be impacted by that. Regarding the second quarter, we are expecting sales to be between $355 and $365 million. The R here in that range is all about supply chain. And now I'll turn the call over to Rob for more detail on the financial performance.