RBC Bearings Incorporated

Good morning and thank you for joining us for RBC Bearing's Fiscal Second Quarter 2025 Earnings Call. I'm Rob Moffitt, Director of Corporate Development and Investor Relations, and with me on today's call are Dr. Michael Hartnett, Chairman, President, and Chief Executive Officer, Daniel Bergeron, Director, Vice President, and Chief Operating Officer, and Rob Sullivan, Vice President and Chief Financial Officer. As a reminder, some of the statements made today may 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 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 listed in the press release along with a reconciliation between GAAP and non-GAAP financial information. With that, I'll now turn the call over to Dr. Hartnett.

Hello, guys.

Good morning, everyone, and thank you for joining us. I'm going to start today's call with a quick review of our financial results, and I'll finish with some high-level thoughts on the industry and our outlook for the remainder of 2025. I'll then hand it over to Rob Sullivan for more detailed numbers. Second quarter net sales came in at $398 million, a 3.2% increase over last year. driven by continued strong performance in our A&D segment, and what we believe was continued outperformance versus fears on the industrial side. Total A&D sales were up 12.5% year-over-year, with 17.3% growth on the Fed side and 10.3% growth on commercial aerospace. On the industrial side, the segment came down 1.4% year-over-year, with OEM down 2.5%, and aftermarket sales down 0.9%. Before I go too deep into the quarter of the results, I wanted to spend a minute or two on the strength we are currently seeing on the defense side of the business. New-to-date sales stand at an impressive 26.7% organic growth versus last year. We are seeing exceptionally strong demand in our marine business, where there is multi-year backlog that can thrive. We are also seeing continued strong and urgent demand for our fixed-wing and missile-guided munitions category. With the current geopolitical backdrop, we are planning for the continuation of this demand through the remainder of this year into next 12 months. During the period, we saw unexpected headwinds from the Boeing strike to the impact of Hurricane Helene. resulted in a plant shutdown in Asheville, North Carolina for over a week. These events impacted revenues by $4 to $5 million in the period. Well, now summer's over, and we're moving to the performance during the period. Gross margin in the quarter came in at $173.8 million, or 43.7% of sale, a 55-point increase year over year. The biggest drivers of our margin expansion continue to be increased absorption of our aerospace defense capacity, ongoing synergies at Dodge in a wide range of smaller projects on a plant-by-plant basis that we continue to identify through the RBC ops management process. I'd like to acknowledge and thank our teams for this performance. They are the driving force behind the projects that deliver these results. They are the foundation of our culture of continuous improvement. Net income of $67 million was up 6% year over year, and that translated into an adjusted EPS of $2.29 per share compared to last year's $2.17 per share. Cash from operations came in at $43 million. compares to $53 million last year with the timing and scope of cash tax payments as the biggest factor in year-over-year comparison. We use our cash to continue to de-leverage the balance sheet of over $35 million of debt reduction in the quarter, taking our trailing net leverage to right approximately two times of insurance. As a reminder, we are targeting a $275 to $300 million debt reduction for the year, which should allow us to exit the year nicely below the 2x turn mark, leaving our balance sheet well-positioned for further acquisition interests. Moving to our outlook, on the A&D side, demand remains very strong. As a result of recent events, Boeing is playing an increasingly smaller role in our revenues, and we expect this to continue over the balance of its quarter and into next. And consequently, we are planning our business accordingly. When their strike will end and how the plan to step up production of the 737 airplane is not at all clear to us at this time. Of course, the production of the 787 ship remains unaffected. We do know that their backlog for 737 is substantial. Their customers need the aircraft, some desperately. We stand in a perfect position to support any production rate set by management. We expect clarification in the next few weeks on these matters regarding production rates and are currently busy negotiating and linking contracts now that will support production from Boeing through 2030. Using these assumptions and with the strong results already delivered in the first half of the year, I believe our A&D business should be able to deliver low to mid-terrance growth for the full year. On the industrial side, I was pleased with the results we saw in the second quarter, including the continuous strength in grain, food and beverage, and power generation. All of our weakness was concentrated into a few end markets, primarily oil and gas, as a result of inventory corrections during the period at two customers. I believe our industrial business can return to growth in the back half of the year as drag for some of these end markets rolls off and our relentless focus on driving organic growth continues. Looking forward to next year as we develop our operating budgets today, we see number one, continued defense demand led by marine products and weapons, Boeing 737 at the 38 rate pushing towards 50 rate in 27, strong and increasing demand for jet engine components and repairs, strengthening industrial demand, space products playing an increasingly significant role our lineup of revenues, impactful synergies from Dodge acquisitions as we end the tooling and testing cycle and begin the reshoring of some products of the RBC plants, and important and incremental expansion of our statements of work for European aerospace community. With that, I'll now turn the call over to Rob for more details on finance.