RBC Bearings (RBC) 2 Aug 242025 Q1 Earnings call transcript

Greetings. Welcome to RBC Bearings Fiscal 2025 First Quarter Earnings Call. [Operator Instructions]. A question-and-answer session will follow the formal presentation. [Operator Instructions].

conference recorded. this reminder, a is being As I to Director your like to of conference over turn the host, Relations. would now Investor Rob Moffatt, the Please go ahead.

Officer; us First Good and RBC Officer. of Chief Rob Chairman, President Bergeron, today Investor and me Daniel I'm for are thank with morning, Director Director, joining Executive and And and the and Rob Moffatt, Officer; Bearings XXXX Chief Quarter Vice Vice President on Financial Fiscal Relations. Earnings Dr. Call. you Hartnett, Operating for Sullivan, President Chief call Michael

Before filings detail projected the recent of company's XXXX. impact Private of could beginning today's the These to factors described due with call, risks Securities website. forward-looking company's more let will are and the condition. me SEC and the of the of detail financial Act those remind in Reform Actual Bearings you a variety results also RBC the press that greater made and some [indiscernible] release Litigation under action may on statements are that differ factors. made be the from future results operating today for in materially

between financial included part available the call information the Hartnett. and addition, Dr. as I'll is GAAP website. on release the is and With company's back -- In of the that, reconciliation turn non-GAAP now over to

the then review positioning with with hand quick everyone, the Rob high-level for and and our And I'll us. joining to some -- a to our fiscal thanks RBC's today's on 'XX morning some in and color you, for fiscal Rob, some and call to finish outlook. on over thoughts good Thank I'm going quarter numbers. industry, it start detailed year of and

defense slightly in and Defense, sector, contracted X% A&D came through $XX.X sector result. led $XXX.X our we quarter-to-quarter sales X.X%. In the aerospace a continued Strong year. our expansion of over increase expanded rate, unquestionably Aerospace balance performance quarter million industrial sales showed XX.X% expect with year-over-year business defense can sector from million the at where and XX.X% the with our from approximately a a The quarterly year. $XX expansion last million, showings First at strong

are And our and/or individual quarter plan for in the spot plans these manufacturing and million. Weakened expect are productive of showing successes. our small in million, our the active well quarter's promising in performance acknowledge year. Adjusted are the markets the are X.X% oil XX.X% was and $XXX of a were this of last who improvement and year. at X to currently contraction own many our Sales peers, reason continued today. held against areas projects sales. side, many contributed they general strengthen operating above us performance. more and and synergies of thank and performance. Still sector machinery productive some sales sweet extremely teams it is our semiconductor for and On markets. industrial We very we Clearly, RBC's like $XXX.X the second percentage to seen for in the to prospect. I'd for came these concepts executing within completed and gross Clearly, regard margin half this well, this to in for breach almost plants gas in

think Group sweet to net the performance the Defense we X.Xx, same with allowed XX.X% $XX.X million the year. Net activities approximately million last way of to year, fiscal increase. our versus a from really of a another revenues. As result, the income spot. bringing we're can't to was adjusted Aerospace Obviously, debt adjusted and share $XX.X to provided debt by of year-end. the XX% another this net reduce us $XX performance during expect period, was This and better EBITDA Overall, a million $X.XX ratio pleased more the a EBITDA was and cash very operating start through

of of a downs as and normal seasonal regard impacts this holidays, ups chain. vacations in Some result and supply

On in RBC half second are are the plans is the and our aerospace industrial customers. today year and as to customers accordingly. as to additional industrial defense the from setting planning of see well side, support strengthening space we positioned both well demand

to We awards. place. plant more augmenting additional Rob have in I'll on our forces financial details call and the performance. in accommodate now skilled process are production turn capacity, workforce business to of the trained capacities and the the over for

Mike. you, Thank

by indicated, XX.X% adjusted strong Dr. by the for another adjusted and is XXX quarter that, flow of synergies ongoing first tailwinds Dodge roughly of [ of driven growth strong our growth sales of quarter gross growth growth the part from As XX.X%. $X.XX as in to Along year-over-year. manufacturing of X was aerospace this cash EPS in we percentage XX.X%, This points Hartnett with of and gross ] margin EBITDA sales basis surpassed had and expansion, X% increased was a with quarter at continue large in biggest assets. drivers coming RBC. of Total here free be an expansion utilization margin year-over-year. The

plant saw in mix. a also strong efficiency We favorable expedites from tailwinds

ago to support the international future that that we have needed and strategy the part IT we On were extract as make support of line, SG&A our including investments the support. With to moderated additions Dodge we to growth. expansion This modest a year and sales continue amount to the growth able line this back SG&A highlighted includes infrastructure the office resources of period, force leverage said, quarter. the rate and in versus our of on growth, that

this year's eclipsing adjusted was credit and for forward, in operations which XX.X% in high with plant of the diluted new synergies sales of this their including efficiency up of in a the was of million normalizing to at to RBC, calculation our plant recent Altogether, multiple milestone teams achievement fiscal almost XXX led this increase $XXX multifaceted of QX for year-over-year points of very a 'XX. on The of led layers $X.XX, X%. XX.X%. QX. This representing effort impressive The efforts for the the second XX.X%, EPS tax peak Going deserved margin XX.X% into levels during last revenue adjusted XX%. year-over-year EBITDA versus Dodge quarter. The to quarter, versus of record adjusted management basis our before a EPS of being moderate our growth, is as QX in year's across quarter company, a in extracting result EBITDA growth headwind last adjusted of up of rate an EBITDA XX.X% year-over-year is percentage team running margin expect and an we SG&A XX%,

cash, growth ran flow on conversion by XXX% and improved million capital cash performance. $XX.X of This net free income a rate basis. of terms fueled working strong and In year-over-year was at XX% grew

this we million million to $XXX meaningful term We and leaving of a end loan million balance total net $XXX of loan. usual, leverage at the to the trailing net the year. The term repay debt repaid the was and As for quarter X.Xx. million, on expect loan of cash portion of [indiscernible] at used our the to $XXX the $XX down continue continue to pay quarter to $X.XX billion

for mark expect to path. leverage should below right M&A come exiting net a the deal room to We return leaving Xx ample trailing the the to well across fiscal year, continue be our

conversion as conversion drive excellence fiscal high organic free strong to to the accretive X.X% an on flow. In product at price. free mandatory strengths for assuming With QX to be leveraging levels inorganic this cash cash automatically share reducing that, Q&A. of impact approximately of share, flow the total cash however, is million as open is in earnings for please preferred total was quarter conversion and by manufacturing meaningfully October engineering, XX, the accretive basis. continued $XX expected to growth, expected This We Series 'XX's will cash and call an RBC. outlays cash our stock current conversion. focused our margin payment and A As convertible core development annualized slightly the It Using will another flow XXXX. results per on a convert remain net approximation, this the dividend be reminder, closing, free operator, future more on to roughly our remove is of

with question from [Operator Stanley. Instructions]. And is Kristine our Morgan the Liwag of line first

to weakness to the in With the performance. you margin have just still to business can XX% how But away exactly end trough for more the what of that mean, about see with market are far you're detail what of in top improvement? decline issue like little a here, markets Because seeing it a content and from line. provide incredible pretty said, we'd quarter bit a industrial I gross that's kind in different seems end see the starting we the in and is

amount saw XX now. -- that industrial markets, the that at on when we've of the softness, there's Well, seen and oil few months we that's there's we're and substantial things almost where for a And semicon Yes. looking and semicon gas. Kristine, in -- a And continued

this Ladies is by. gentlemen, We're difficulties. the please experiencing operator, technical and stand

please gentlemen, Gentlemen, you by. question. for your momentarily. [Technical thank We resume continue. Difficulty] Ladies may standing and continue will you Kristine,

Where Kristine? to did I leave [indiscernible]

gas, you seen where dropped were you've oil that and Great. off. Mike, line about talking the that's where weakness in semiconductors and is

Yes.

Okay.

sort year is now problem much So ] major that oil a the of -- and we planning position. X got those sort are [ had a and of gas a majors. have liquidating and The customer, we is too ago

better over the -- the rest the And the of buy there's of year rest get We the on a as expect to the downward slight him progresses. business, market.

negative, Some but down. [indiscernible] positive, overall some

to buying new seeing was a in Or of the aftermarket in on just follow these the an before? overage buying [ of And builds? weakness. ] bit up was we're there where if terms in Are also little Great. mostly in the slowdown

Yes.

and industrial by support slowdown sectors large, that I various in aftermarket. think a the aftermarket it's, in the it's the

markets, you you I end see. potentially quarter these could as at trough? do each do And recovery any visibility think And that? revenue into then which industrial of have look for the you

I visibility, And ] economic we're the do piloting had flat very models give that been piloting our third -- how tip last that through buy sell, -- of the that I quarter. visibility. general of those us of are economic and And direction. us and sort that's [ I have it's we backs saying probably to have stocks to today. What know don't overall in kind the models strong our telling sort is a right? If would which have what quarter

Securities. is the Michael Ciarmoli Our next question of with line from Truist

guess your was industrial. Maybe of kind driver just to of delta? did the weakness, the stay revenue biggest that came Or up on materialize? -- quarterly I of short guidance. that industrial Was results on anything else the

the rates consumption it's just was driver. That -- rates. -- biggest all consumption about No. It's industrial

beginning rates and we the actual the the of creates Our severance.] those at during quarter that the see estimates quarter for [ consumption

that have of the pretty do acquisition industrial sizable you amount guess I revenues you Do the have mean is of level -- company now I aftermarket visibility level. Got ever go it. and it. at the Got that the of through into if min-max of Dodge Or thresholds? the since you maybe distributors to demand more have of even in base to any know destock pronounced of sort in certain that the do these level shipping a you industrial industrial some channels? sectors? Will have a you're there's distribution

the And don't on. have. information situation -- basically, probably what have mean quite destocking I much detailed is. and I they companies we public some Well, these there's -- didn't information you going of that on any published I are think same their

recovering were of part been time. as delta order an extended still I year-to-year backlog. we on thing complete ago, supply for the and we those products the difficulties, couldn't orders. supply that there result cleaning that But a are a a have comp of think benefiting up book chain of from was Those period year

normal. year, last we backlog probably of number chain it so is as $XX supply might as be And from we -- this And benefited million that reduction. high some that year,

[ And our economic tension rate. mean, I is as serious I going on feedback so in we're just And living ] on there's distributors, any don't think the there. in

certainly they think you had do all of comp first the sort of think quarter fiscal a easier. in industrial, think I it's mean, of as remainder 'XX, pressure you Or tough you year-over-year be 'XX? you for year? look get for out for Do industrial going low single-digit grows to you Do but the kind

we're [ rate. in a and today ] And it gas. And rest said, recovery of [indiscernible], then that's industrial oil consumption milder the plan is we're about a economic expecting, it I growing. Our as recovery in as expecting --

Okay.

defense Okay. Got Any distribution, quickly, on already? aerospace, and it. I'll out And off rates then by just think year-over-year then detail the here. more I channel called real growth OEM jump you and aftermarket

Yes.

it at now. those. think I give He's can you Rob looking

So the over turn I'll call to Rob.

Yes. right ] [indiscernible]. very both XX.X [ Like consistent. They [indiscernible] they at OEM, were were around per

So very consistent.

the ] line is question Skibitski Global. with [ next of Pete from Our

the torrid to XX%. Was so Or Mike, defense, performance you're think the few that I just above programs just are helping growing in OEMs. there Nice said on the you growth just market, much that? above a because drive all

you wondering if on what's driving So I'm give can more just us that. color

It's if all. like in you that pricing strong quarter know growth. of a don't the about type I at And fourth row can talk really

pricing terms maybe In catching you're lot past I of inflation with finally of LTAs a up know well. on as because

there. So if comment just you could

Yes.

the in Just -- lot from get I we're 'XX we're way, that to roll 'XX. saying right our of don't now. seeing A and pricing any the thing not out contracts over of think benefit

'XX, in So maybe maybe that still living probably 'XX. 'XX, set prices we're really with were

But we're that going continue about will major there you demanding with to started a bomber, And expansion. several difficult XX going of this become very Missile, need now years. be [indiscernible] kind to right So I us. more for us. comps long-range fighter, that's years, on the are that's think the year the not build away -- XX joint involved that headwind -- strike That's are for going that because it's ago. But or a probably talk X drive basically year-to-year about submarine, programs that's to demanding. demanding, when to

[ DoD that ] we're So the Black of in, ] ] the for [indiscernible] big Apache some [ a programs major upon extent, other is the as a other platforms the having. And also, platforms. the [ and know interest they whether there's based not those lot doesn't benefited on. helicopter on has where important really rest of because course a that the that program and ] for we're those just interest the [ And Lockheed result lot for are we're platform are of was the ship impacted that buy Skout a in viral cleared, of the ship to money could the cancellation working Hawk, world those [indiscernible] there's an environment of and us sort

it's we're for defense side. of on kind a one the us So -- perfect

Yes.

That Okay. sense. makes

like maintaining June me, for now about follow-up sounds maybe and is July. one at about MAX, where Just they're us commercial think Does on at the XX on side. I Can couple so. over the sound you right? guys you XXs were quarters? in like the [ in It just about the ] Boeing month that or past remind you of they've per been

that Yes, sounds about right.

our a planning the think think at rig. I I now is XX -- probably

at they've they'll up, year. new he it he hope that. And end Although playing I the agrees even agreed indicated, CEO our with modest has that regard goes it when with think -- [indiscernible] the we so very be the XX to the demand. of further. But have into And to way by yes, be a Boeing built planning expectation out. I with seems is

[ accelerate, that the guess, end your it imagine of sounds I -- could year, I fiscal rate potentially make like. ] they if 'XX, And you XX% the into Yes. by

to Well, behind ] assuming FAA I Yes. can get they've think the step-up XX, to to get they got approve XX%. [ a

parts And the ahead have to X aircraft be months so cycle our ahead obviously, most rates. planning that's available our assembly of of for -- the part,

XX. of kind -- So October that's into on April the that moved moved

conservative really using really, a So be we should [indiscernible].

of line America. is Our Lyonnais next from question of with the Jordan Bank

to color keeps could at capacity On if seeing at this get size changes the in looking And M&A, scope? A&D the if you're side any you're or growing rate? on in two, more pipe you any guys give deals anything

A&D to investigating we're like it seeing we're and RBC. market companies with think I coming Well,

this does those report point. at capacity. their companies to nothing to come of likely market, really one to if Obviously, they'll market have with come We own

for and just So years. that going in they can several the on sector pleased in world, our probably we there's -- won't in a we we're [indiscernible] and can lot sector next that tax ours. But very and the either A&D with growth

So and take about on. we we're what being cautious conservative

of is KeyBanc with question Barger Capital the next from line Markets. Our Steve

above is Mike, seeing down performance. great X.X% gross XX% margin industrial with

you. Thank

Sure.

Or mix there something Aerospace? all it. in unusual there? was in earned Was You that

No. Aerospace Its margin contributed. improving. is

I think in were more [indiscernible]. that it's little a -- just inked lot efficient more we in more 'XX a were that. contracts through there's volume and in bit the are a execution We're as of that I have result as said, way 'XX, 'XX that of our of becoming of contracts those and because a absorption

to capitalization and methods some better better also have there of We designs. little those here and a execute

So I day. the the that carried was side would say performance very on really it industrial solid

So organic? Industrial were X.X% against even negative margins up

right. That's Yes.

a overcome, industrial it what to in was Because so rich? drove that that's what that? big headwind mix pretty that Like made it? And isn't absorption

Well, a and mix but have say see going quarter. see long forever, for we've margins we're did the we're been that this talking starting that about favorable saw They time, we first it. a I quarter. can't in synergies to to like

think neighborhood is in is see. the hard year but all XX% up more when That's probably living I done, predict. that like the we'll end we'll to

there's that chain Plant spot, their [ efficiencies cost that. And in supply we've were absolutely favorable. operating in So we've had had no There's structure. synergies lot question improvements and mean, better. methods I went improvements. of was sweet they're on. Mix a ] about

little of in piece a come when difference. sort a the morning role it they to makes each they [indiscernible] has issues. of of these everybody and So work one a And

basis that guess there comp. guiding what tough thing down XQ obviously is I But causing sequential against decrease? fiscal a you're margin points gross or XXX So XXX is specific any

production we QX. think consistent days time. pretty in That's over have fewer been and QX I

couple we added you up is QX. with things then headwind first of quarter, that this have mix you So seeing we're to in the in favorable And just where had a bit little you a there. the

it, basis, probably on way at it's you from calculated a know don't on to the look a more right, And right expansion range and the year-over-year year. is

up the comp. Understood. against revenue And is a Aerospace XX% on then XX% side,

You talked the Do right you expect in all there. about things growth XX%-plus are XQ? that again going

can't not that happen. it for We're but it, planning won't say I

industrial down Well, more you expect of that I revenue recover is some guess that's question Do is, the right sequentially standpoint? half. a you're the seeing up to then softness likely the think that Or from in you now? given back

Yes, down. likely that's more

the question next Ritchie is Sachs. from Our of with line Joe Goldman

long-term to more start I Srivastava Vivek want question. on just is This a for with Joe.

Your EBIT margin, about you've not which away EBITDA are -- we've XX.X%, long-term today. seen where the is margin far previously highest mid-XXs talked this quarter, from you

updated So wondering of eyes part you how the just your to from the here industrial margin what kind just inflecting on positively? long-term once set margins do start businesses improvement have think and about

We're we talked thrilled XX% out where talked with what QX. that We're coming we're year. about ahead QX. gross the about gate this we into the far We of achieved of margins seeing

expand to is for and mission to Our lemon ability. squeeze continue every quarter margin to invest the our

we're margin. we different So guidance, we're have I drive put are opportunities think And long-term but pockets. [indiscernible] to looking telling out that to not in we continuing EBITDA you that

helpful. that. on follow-up That's a maybe And just

continues long-term potentially the target? margin here GDP. improve, probably target, reinvesting more your industrial growth, accelerate to something that bit your could that to As growth within close Xx to a GDP return Is to business, from industrial Xx

Can sorry. you clarify? I'm

Yes.

getting from right here something accelerate now, Just potentially strong that for such could margins on? be back will reinvesting in the given business growth you're

we're different ] have very outhouse. things. expensive reduce for in We're make buy manufacturing to plants industrial the In [ our equipment cost we other sales processes are and are business and incorporate in-house trying that those in the Well, reasons. in efficient don't of our by I words, putting that today more to X will capital reinvesting think cost

that those in So and not -- that's we're [indiscernible]. ongoing, in substantial kinds of investments making

of that's so And we're that, accrue that [indiscernible] margin -- gross will to that's over time. reasonably where

business terms an of now running annual probably is In on growth, $X the billion. rate industrial over

bigger really we have some ultimately, big the to projects a some projects. growth to So pretty pretty time number, those -- take of implement. level requires big in mechanism projects. at measurable to so order on And impact and kind But our internal ultimately that performing eye get

to now. ongoing of right got work that. through so And we've And that's just sort

That's very one helpful, me. question from [indiscernible]. last Maybe

backlog, backlog the within XX press didn't Just on XX that see months, the in we you I noticed due but backlog release, beyond provided months.

behind the to wanted that? any just XX And on backlog the Just due understand months. color rationale within

made the position. we backlog because to on point, presenting from decision here a just significant out, side, that that's our We of on last on this defense we more to going Yes. the look at at that strategic backlog way communicated the appropriate were business, our full and part think be such overall quarter a especially

next Thein is Tim from line question Our Raymond with of the James.

some obviously of, obviously Just me believe, -- But being a, for that does outlook on that was discussed and the terms I coming year may change more -- side? guess, I of aerospace even economy that, outlook -- Dodge industrial gross the fixed margins And to one in of related I into thinking a then in a you there the weaker, Dodge the does in in more. But the that maybe of the year as part first back a quarter. that maybe you're the the some they the lift some of terms second here earlier came year, contributor as was the the half in maybe in more the guess of lot the that ahead later on absorb in of for of kick expectation quarter. those terms you the and see synergies expecting better benefits pull that capacity

still a stated, even expectation you there's more do some second more is simply from -- -- half guess, lift these I room that drivers? the still of for of So kind

we half the continue expect second to lift. now, Right

We bridge, that your at had street the low your infrastructure through to beta something of that years, to One integrated over you're actually things had us work. with It's driving you so we the of cereal When morning, pouring to over is performance a when actually car to when that you're company. It's the road. revenue bought to very series economic a various the we Dodge do do or attracted cycles. that in into something at look get that. U.S. a when do that with a

and years we way nature only had supplied had it. lasted its we before we're whatever So it, with and to replace -- a few

Dodge America. North revenue a by driven very has So in strong human recurring consumption

whether cycle. expanding well through slightly performed contracting is the probably And economy it's Dodge's so business to the or is going

of of In oil the for feel semicon what the in expect we we the more rest Middle the -- year, ] the up, if we with terms the we gas And and it in expect that [ East to our will definitely expect pick acceleration interferes and there's tension to recover. production of business. oil, will

of So where sits that's thing now. sort right the

for Ladies gentlemen, closing you. call to further and Thank no would at like turn to Hartnett I there time. remarks. the are over Dr. questions this any

Well, speaking you fall. to like thank in forward to participating we to again and I'd for everyone today, the Okay. look

So a good day.

This for you today's participation. will Thank your conference. conclude

You this lines now time. your may at disconnect