RBC Bearings Incorporated

Good morning, and thank you for joining us for RBC Bearings' fiscal first quarter 2027 earnings call. I'm Josh Carroll with the Investor Relations Team. With me on today's call are Dr. 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 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's Bearings' 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 the reconciliation between GAAP and non-GAAP financial information. With all that said, I'll now turn the call over to Dr. Hartnett.

Thank you, Josh. Good morning and thank you for joining us. I'll begin today's call with a brief review of our first quarter results and discuss the trends we are seeing across the end markets before turning the call over to Rob, who will provide additional details on our financial performance. We delivered a strong start to fiscal 2027 with first quarter net sales increasing 19.2% and the Board of Directors of the Board of Directors. compared to $2.84 in the prior year's period. Adjusted EBITDA rose 28.1% to $181.2 million up from $141.5 million last year. Free cash flow remained a strong $146.9 million and we eliminated $77 million of debt during the first quarter. Turning now to our two business segments, approximately 57% of our revenue during the quarter came from the industrial segment. The remaining 43% came from our A&D business. A&D has continued to perform exceptionally well with segment revenue increasing 36.9% compared to the prior year period, 16.6% of which was organic. I'll dive now a little bit into our two business segments, starting with aerospace and defense. Commercial aerospace growth was 21.8%, 20.3% on an organic basis. Defense was up 64.6% and 10% organically. Across the A&D business, we are observing healthy order activity, increasing RFQ volumes, Contract Inkings, and daily customer requests for additional capacity. We continue to expand production rates for commercial aircraft and engines at several production sites in North America and Europe. As you know, our products are deeply embedded across the A&D markets, and we see a very healthy demand outlook. On our space sector, we see an impressive and building momentum As you may recall from our last earnings call, our space business generated approximately 70 million of revenue during fiscal 2026. In the first quarter alone, our space business contributed 25 million to revenue, putting it on a strong run rate for fiscal 2027. And we now serve more than a dozen space customers. Robust investments by our major customers across both commercial and government space markets abound. We believe this business is still in the early stages of becoming a significant and long-term growth opportunity for RBC. Shifting gears now to marine, our marine business demands production growth and a lot of it. Our backlog now stands at 2.3 billion, much of which is marine. Given the complexity of these designs, production can be challenging at times with knots in the supply chain that can appear. We have untied most of those knots and expand and expect and are planning to expand shipments from this sector significantly in the second half of our year. And we think most of those problems are now behind us. Turning now to our industrial business, performance remained strong during the period with OEM revenue increasing 21.5% and distribution revenue growing 3.1%. During the quarter, we saw growth across sectors of aggregate and cement, food and beverage, warehousing, semiconductors, and grain industries. Only a small number of our end markets in industrial saw a very modest decline during the period, reinforcing our view that industrial environment remains healthy and poised for continued growth. Overall, we are excited and energized by the strength and outlook of our core business sectors. Our priorities remain focused, execute efficiently, support our customers, and investing the capacity and capabilities needed to meet the growing multi-industry demands for RBC products. We believe our differentiators make the difference. These are outstanding service levels, Strong Brands, leading market physicians, technical expertise, and most of all, our employees, people who work every day to make RBC the very best we can be and provide the foundation needed to serve well all stakeholders. With that, I'll turn the call over to Rob.

Thank you, Mike. We started off fiscal 2027 with a strong first quarter that exceeded our expectations, with net sales growing 19.2%, which led to a 26.9% increase in our reported gross margin. Gross margins were 47.7% for the quarter compared to 45.4% on an adjusted basis for the same period last year.