RBC Bearings Incorporated

Greetings and welcome to RBC Behring's fiscal 2024 fourth quarter earnings call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Josh Carroll, with Investor Relations. Please go ahead.

Good morning, and thank you for joining us for RBC Barron's fiscal 2024 fourth quarter earnings conference call. With me on the call today are Dr. Michael Hartnett, Chairman, President, and Chief Executive Officer, Daniel Bergeron, Director, Vice President, and Chief Operating Officer, Rob Sullivan, Vice President, and Chief Financial Officer, and Rob Moffat, Director of Investor Relations. 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 Security 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 between 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. Hartman.

Okay, thank you, and good morning, everyone, and thanks for joining us. I'm going to start today's call with a quick review of our quarter and fiscal year and hand it over to Rob for some detailed color on the numbers. And then I'll finish with a high level thoughts on the industry and our fiscal 2025 outlook. In the fourth quarter, we delivered a strong finish to what was historic year for RBC. Net sales came in at a higher end of our quarterly guidance range at 413.7 million, delivering roughly 5% of year over year growth, capping out a strong fiscal 2024 with revenues of 1.56 billion, delivering growth of about 6.2% year over year. 2024 was another year where 70% of our revenues were sole, single, or primary sourced. That's a key component of our business profile. And over half of our revenues continue to be from the maintenance and repair related side of the market. These offer attractive margins and non-cyclical growth and obviously a continually growing installed base. In the aerospace and defense segment, we reached an important milestone with fiscal 2024 sales surpassing their pre-COVID peak, coming in at $519 million with a year-over-year growth of 20.7%. We expect more growth to come in fiscal 25 and beyond, but more on that later. Within the segment, commercial aerospace was up 12.0% year-over-year in the quarter and 20.3% for the full fiscal year, with defense revenues up 29% in the quarter and 21.6% for the full year. Additionally, growth in A&D was fairly balanced through the year with distribution and aftermarket sales up 23.4% and OEM sales up 20%. On the industrial side, trends remain flattish with fourth quarter sales down 0.4% and full year sales up 0.2%. Broadly speaking, aftermarket sales remain stronger than OEM in both periods and end markets continue to be mixed with some growing and others down. During the quarter, we saw strength in power generation, waste, and water management, while weakness was seen in multi-industry, aggregate, cement, and oil and gas. Delivering strong organic growth relative to our peers is a key part of RBC's playbook, and in fiscal 2024, that was no exception. Adjusted gross margins for the quarter came in at 178.3 million, or 43.1% of sales, an expansion of 90 basis points over fiscal 4Q23. And for the full year, we came in at 670.5 million, or 43.0% of sales, an expansion of 180 basis points versus fiscal 2023, and a new all-time record for RBC. Our success here is driven by multiple factors, with ongoing synergies from the Dodge acquisition being the biggest contributor, coupled with improving utilization of our aerospace asset base and an ongoing pursuit of growth in higher margin and markets. For comparison, our adjusted gross margin as a percentage of sales per FY or the third quarter of 22. And the first quarter following Dodge acquisition was 37.6% compared to 43.1% exiting fiscal 2024. That's a 550 basis point expansion on the gross margin line. At the time of the acquisition, we said we were targeting 75 to 100 million of synergies over five years. We estimate that we have achieved somewhere between 70 and 80 million in just over two years since the closing with more to come. And you can add, we have already repaid 625 million of term loan that was taken to make the acquisition. The Dodge transaction and what we've accomplished with Shoblin and Sargent acquisitions before that has been absolutely transformative for RBC. Over the past five years, net sales have gone from roughly 700 million to over 1.56 billion, growing at a 17.3% CAGR. And even more impressive is EBITDA, which has grown 19.8% CAGR, and free cash flow, which has compounded at an amazing 29.2% CAGR over the past five years. I'd like to use this opportunity to express how proud I am of the team for delivering this kind of performance, along with yet another year of strong operating results in fiscal 2024, and for creating much of our own success with company-specific roles and margin-focused initiatives. We have a lot to be proud of in what's been accomplished, and as always, we'll be aiming a little higher in the upcoming year. With that, I'll turn it over to Rob for more details on the financial results.