ROLL - Earnings call transcript Q1 2021 | RBC Bearings Incorporated

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the RBC Bearings' First Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants line are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Relations. Investor Hamilton, Brooks you. Thank ahead, sir. go Please

Brooks Hamilton

are thank Good Chief Executive RBC me Officer; joining Hartnett, Financial today for and Daniel Vice and for fiscal morning, on President XXXX President, Chief call With Officer and Bearings' call. first us conference Chief J. Officer. Bergeron, you quarter and Michael Dr. A. the Chairman, earnings Operating

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

addition, non-GAAP is of as part website. is financial release the and reconciliation and between included the available information on In GAAP Company's

Now Dr. Hartnett. over call I'll the turn to

Michael Hartnett

morning year, ‘XX a to XXXX decrease of for last and and first quarter million RBC's versus fiscal $XXX.X were Thank Brooks first quarter you the for conference period same good sales Net fiscal call. welcome the of $XXX.X million XX.X%.

sales $XXX.X to $XX.X products net net Adjusted represented quarter operating in of $XX.X for of or with the with was sales. the and and industrial first XX% quarter same ended impact XX.X% products of last up of sales XX.X% last this compared We and year's XX.X% Gross cash was million entered this XX% the period year income million to of of period million, million million $XX.X sales, $XX.X at we of margin $XX.X in or year. of the million, the XX.X% quarter of million The of last economy the of travel. sales XXXX million aerospace sales; to or of XX%. Adjusted compares XX% quarter number and was on visibility $XX.X debt. sales compared net same limited due with to pandemic and $XX.X uncertainty net net the and EBITDA

We health extraordinary vendors continued and well-being procedures our with for customers our protect environmental our strict measures guided as to the and management the employees, CDC. by of

industrial industrial most. experienced down both activity. operate resources prime few driven a United A shoots few last were few wind, and in in year to the this which a We setting green on a all we projects. Sales helicopters, and clear first net decrease their on the our turn mainly a supply Europe. manner military and last The meet put quarters offset that vehicles few XX.X% the foreign down XX.X%. mining States XXXX over to markets, lasted review in OEM That weeks the continues distributors general and safe pandemic to and XX.X% industrial commercial benefit travel in [semicon], for their oil pressure main year airframe commercial rates see XX sales producers we builders to the by and Sales appear QX build continue of aftermarket back defense, the defense at to to plants aircraft around of the industrial due missiles in the months. commercial and have a from started in down expectations. engines, XX.X% discussed a The year. of fell to by natural the next major products in commercial mandatory shutdowns variance our chain. aircraft The were from and plant is requirements plus and aftermarket high-speed for uncertainty defense aircraft Aerospace trains. increased Important and Aerospace quarter OEM contributors aerospace were aftermarket. XX.X% airframe

supply We demand continue schedules of products levels. reworking our and to our and align new to tuning our the fine production capacity

sales quarter Regarding and of $XXX be between to number second a million we to our are $XXX and project. expecting course is million difficult that

situation is forecasting been challenging out First industrial for never of hits fiscal in same all a expansion calendar backlog. going as day the XX% what as have our and never to is we the it's I've our this to Much the guess of in numbers seen third quarter, high this. second in GDP like business and it Basically really be period. quarter.

as to now middle with I'll turn more in play So hence the for and can we're Dan the best the we ball to on over that the call performance. guidance. fairway trying we up of financial the detail came

Daniel Bergeron

$X.X to by million offset costs Mike. Yes for the of of other related fiscal of XXXX compared personnel million costs. $XX.X last Thanks to the due year. lower $X.X $XX.X mainly SG&A first for quarter The was decrease was period million million same

As for of last the a period the period XX.X% year. same last first XXXX was million fiscal of expense sales compared percentage $X.X million for SG&A the XX.X% same first compared operating fiscal of Other quarter was to for to year. quarter expense XXXX of net for $X.X the expense

first million year the of income by have mainly offset period $X.X Other amortization for non-operating year. operating income operating same zero other was $X.X $XX.X XXXX. tangible On $X.X expenses of of consisted would $XX.X $X.X same in related the million the adjusted items and last million assets quarter of of the other of quarter comprised period $X.X operating basis operating for items. Other compared income. assets amortization million with for first income operating Operating mainly the fiscal an $XX.X of to and was first XXXX XXXX. income $XX.X for for fiscal million the other last of of quarter fiscal in same to first costs restructuring fiscal fiscal to of million quarter for fiscal intangible million compared in XXXX been adjusted $X.X first expense compared XXXX for the period of and the For quarter were the expenses XXXX million million million

other, non-operating expense other other the For of by non-operating quarter foreign offset by exchange of million] of of foreign expenses $X.X of Other the exchange X.X items. fiscal XXXX for the $X.X million was XXXX sorry, it [$X.X quarter primary million X.XX. first of offset items. loss by consist Other million first fiscal

quarter share quarter for company the $XX.X the per of for million adjusted same XXXX have to net for would of income of adjusted for to per XXXX quarter For compared the On fiscal first income per XXXX fiscal share period compared basis share first would year. the reported $XX.X basis was EPS share diluted compared earnings $X.XX period of the period of for the $X.XX same net last same earnings the million to year. million adjusted for share fiscal an $XX.X $X.XX of the income last $XX.X quarter for diluted an net $X.XX per compared of on first year. per XXXX to million last have same year first been period been and share the fiscal per last Diluted

in last sheet. flow in $X.X compared first from the million cash the Capital operating generated fiscal million first XXXX of the in quarter year. same company activities $XX.X expenditures Turning for to $XX.X were to quarter period the $XX of period million balance cash the $XXX.X the has million cash year said the as compared end of on and of XXXX for fiscal of same had and to was $XX.X last total already million million Mike debt as the June we

Q&A. I'd the operator So call to like to for turn the over

Operator

question first from Alembic Our comes Skibitski Instructions] [Operator with Global. Peter

Your line now is open.

Peter Skibitski

guys. Hey, good here. Nice light quarter we're of in the morning all in environment

Michael Hartnett

Thank you.

Peter Skibitski

Yes.

those kind forecast the fiscal slowed if quite and ‘XX I'm easy comps Boeing you you production see just down kind and balance better year you same trying aero then the Airbus on headwinds that that and or your early in guys being the this the had not of commercial half you first clear? you maximum same get feel of So quarter production just we of on have you might side the back like from as will OE of and kind you updated your touched to you think ‘XX Mike, in did especially in the the a headwinds have way could of at pretty of I'm see

Michael Hartnett

be like mean Yes. your, first of all quarter Well, pandemic you can't happened moving I I your your rate rate, March. if your you quarter into all mean literally have production first materials quarter you're thing this inbound. I this whole in into March, first for think the don't so and by production moving and

time in production period. to demand and all basically then schedules so that inbound sort in of our the had it's reflect So your in change almost it's impossible materials

the of is where So as that maintain be to the margin normal performance what went a of on the by rates and our year determines and best possible kind we'd set order through schedules we we our business run ran that balance started the that and to baseline amount needs in should tremendous how where production business given to cost the of to be like calculus production maintain. planning

if in happened the don't I quarter. that all I your So question. know first churn answered

Peter Skibitski

second almost Well, very the not flat in sequentially close you're so It's into quarter think to if quarter about quarter. much. second down getting the we second the

industrial quarter be in it might but aero second a year-over-year offsets from commercial saying getting stronger? you are So down more bit maybe the

Michael Hartnett

Yes.

and really I are congregate a I the view gets going rough the it Commercial get through that being kind and just I as a sick patch chance. of think on of Everybody party carriers it's it's of they that and confined they our clear industrial really, little down mean, a whenever right aero notch sees think backs and to stronger. everybody just are now. road clear a it's people

timing carriers capacity is will later supply. earliest. but other whoever people get working by are the what or we So quarter, later October Unfortunately looks [Maldera] the like release to ones which sort in the with it else expect year at that expect exceed of Things I us to the in Pfizer see have the the on it failed, it's many the of for better that's think the fast. of I smaller going the an aircraft demand telling be or the vaccine kind hundred of

are stressed So not because that many as just financially. carrier people the lines carriers are is the running and there

statements prices the ticket new I months, because will supply or the is when problem to nine opposite huge this a of of now they're next we've you I Airbus winners up. happen going turnaround from will fast. builders right Certainly think to these six we're we had the going draw to So builders to to into have out then figure the Boeing know column. the industry we in money are that to expect mode the how going discussions with trying sure chain's work then That and what they're the work triage to get financially some and in damaged go to and within for and and suppliers been which think of that survivors the reallocate survive consider big they their the

a expect we of so work. of And our considerable expansion statement

in margins the and we now level at our to on going this basis. new things see then to some of accelerated we're So to expect restructured an base towards end run decent this and maintain other year between to improving cost pretty

Peter Skibitski

that year? or queue mean anticipate? retain at A balance questions this of get great. you Do then That's back and in that above of of can will XX% the I margins out you gross I but, couple

Daniel Bergeron

to flashing we can't. going that do to us that tells nothing are There us We try that. at is

Peter Skibitski

regard, and then sorry. go Okay with ahead,

Daniel Bergeron

have and extraordinarily margins expanding that about doing growing. businesses XX% the they're companies some healthy very well We of

of nonsense. a that's in this any helpful So independent base of our

Peter Skibitski

Yes.

on or OEMs sort the out How kind do Okay. to of gaining your just of ask some there? kind own strictly guys you or on you like share, anticipate distressed And come of you assets of it that? then work are pick buying up from about will players gaining statements distressed either maybe thinking

Daniel Bergeron

that aren't to are us. distressed attractive We assets seeing

not they're us. seeing are but attractive distressed assets We to

is that comes full whether be circle seen. So to

that. expecting know it will but another not time we're We

We to up statement support. pick are expecting

Peter Skibitski

I'll get Thanks let else. it. Got guys. queue back somebody Okay. in and

Daniel Bergeron

Yes.

Operator

[Operator comes from Our Thank Instructions] True you. next Michael Ciarmoli question with Securities.

now open. is line Your

Michael Ciarmoli

I'm customers on of everything. Hey morning light guys. guess little bit quarterly last and in I more inventory seeing Thanks taking de-stocking. commercial I good XX% early the which to are aerospace. guys six just nine revenues call I sounded were guys just bit as I We're confidence out Nice on what we're in OEM rates a but It you a mean down. are normal got producing where more for mean you, you of down to just greater you about a seen to questions. expectations and this just and your schedules I optimistic here like build figure Mike, out said figure getting come see range. try rates were in downturn. know that month far struggling even quarter their Boeing multi-year talking was it from? here like the as or you seems May are reporting little downturn than most we've are their build

pretty sense So you can at down of just some aero of be OEM MAX persistent for biggest it be said some of programs here. across headwinds us but give are the you these like and time [XXX], you're your would a what like some producing to I know the going seems

Daniel Bergeron

than produce a build we're advised us. attempting rate, lower Yes. rate rate have that we builders the Well slightly a producing the are to that's at at

know system of don't I'd in to that some to there. out just the just in because So get the more push I relieved system. want inventory I to that like inventory there's

So levels. we've basically costs restructured at plant by our to those operate plant efficiently

Michael Ciarmoli

the materials GE, their I their you they orders are seeing by or are or down mean Honeywell we've their are conversations substantial of purchase some customers, or larger numbers. been and pretty with whether because with these like your are that it's Pratt inventory What suppliers slowing a revisiting you,

So customers right are like what conversations with the the now?

Michael Hartnett

them you'll to periodically there different. are is certain or week certain prices up send supply GE some them. a Honeywell certain and if send of all and of large or what the contract code they with and with the statement supply work, mean ones Well a a of or Pratt take bar you parts those parts I they end during you

So backlog you don't really have on any that stuff.

you for electronically just ship. authorizations You get

Boeing way are price they work the part the work them give have, they do way. to contract of that but that the delivery order a us where then that other a time. big big particularly deliver of subs a there certain at contract they work to is industry and and and that smaller we a guys So lot purchase doesn't subs pricing at give

should guidance. part upon Now be, most that they people applying know based it's that in don't what math category for second of very order order those actually who people what the when a to should it or lot to whether confused they be or Boeing's

be if out advise true we they to try we So into should requirements we that are year. it orders into when sometimes should them in and orders those be what of delivered have they this year ordering, excess what and later their see move next is

Michael Ciarmoli

MAX, on that of at produce next been ‘XX. and then, but of your on sense on ago It being Boeing optimistic a but you've direction a I guys on of where that you of XXX got that looks XX month how MAX clearly to ramp the you were maybe to that's MAX? one last are like alone going couple you the the just kind us you more certainly the a dovetail the think from you you rates and the with quarters were And they two point about can gave a rate little it to pushed get what muddy where quarter sounded year just programs and of obviously view the kind are XXXX we've Okay. delayed would give those XXXX certainly

thoughts So that what's with the platform?

Michael Hartnett

Yes.

with MAX our the the expected content This they this XXX and was mathematical specificity about pre-pandemic. run. where to expected we last This result. XXXX is and is was this where to therefore the was run and talked think February then net was in the I the they time that and some it

XXXX I in believe all So too was just mean now those it's, has accordance redid for and MAX so build build that's up system. of addition we're plan rates and manufacturing inventory projected what we right our X what Boeing sales with and much changed. teeing in rates, the to rates

Michael Ciarmoli

like August even so plan it's by that, certification May it mean mean like like when mean trying here. sounds XX I on were and it lower last But I just we and sounds volumes spoke it the sounded then they to Okay. in I accordingly

in right, Thanks back queue. All I'll Okay. guys. jump

Michael Hartnett

think happens get I'm traveling people the carriers I if thing mean it if or turns around big happen I this and start around there, doesn't believing that and and turns I a thing it's whatever it around whole refinanced big doesn't a healthier thing, air in picture turn or this mean and around way. turns then

Michael Ciarmoli

right. Got it. All guys. Thanks

Michael Hartnett

Yes.

Operator

you. Thank

with Global. question comes Alembic Peter Our next Skibitski from

Your line now is open.

Peter Skibitski

today. Okay, shortlist

growth you except add? the any almost So Would in And what strong it second the agree for like the ask for across the but maybe really color defense would drove sounds Mike, submarines I in to is ramp it board going thought with submarines my sales was you. quarter that half in first you was and you that?

Daniel Bergeron

is will are I they're This the our Dan marine The the for ramp see in X.X% quarter up house. Yes. in but all in the block block we the half mean because around done industrial yes and Pete. year submarines of nine, ship XX and on it's second

next definitely those So over we months the portion and on of that will will double-digit have growth business start force. the working that on ships a nine

Peter Skibitski

since comp in you you And then segment? The the ask growth defense That's guys just [queue] kind of with of aerospace a tough that what ball one out bearing in and in even kind question was the quarter growth drove in of type XX% I great. Okay. to put want about had segment, segment wonder great. particular I which the that and

Daniel Bergeron

by the aerospace on by industrial side side space. driven and and thin our mainly it's bearing of driven the it's It's on Yes. semiconductor section it

Peter Skibitski

half industrial even and but guys there comps saw we it the thought has that anything return in our kind the quarter, growth on last you have year okay you'd that one first touched for PMI a the and you back led industrial coming and change guys to easier then just space June to on into view? of but me see the you of side, By in in

Daniel Bergeron

No.

the the we said which earlier pick as the Hartnett think the July side of little of incoming is to I industrial and good see out a in orders finally in up weeks three had our Dr. first a sign it's quarter. started to starting two-thirds business of

China. to forecast but little it's driven are trains going are the our It's our that's projects being driven semiconductor. it and by hard So vehicles side on by volumes see high-speed back wind for being in which push in and being segment, being come which us. by starting by a we're to into it's that the we're industrial business that driven the helping that are working of European military It's entity driven

Peter Skibitski

there of That's type great. backlog X.X did bill for Actually book the the I business. of you one last call? third we've talked in constant far out do or about decline on on backlog, in unusual decline to low heading like and feel Anything kind for you in quarter in guys one second decline backlog we the with or even was which is and and more me know the we, everything terms quarter talked is risk thus of about kind that of in into everything the that

Daniel Bergeron

Yes. I think. No

I aligned think in everything call. said the it's with we

by has as lead we longer talked portions certain Mike picked on that was aerospace were cancelled increased pushed items the or time on think volumes up offset of defense. but around about I

Peter Skibitski

Okay.

Daniel Bergeron

it's never component of are battle. a our And never big industrials

Peter Skibitski

Okay.

or ahead that time? So revenue up and in in if see start show backlog industrial quarter might do necessarily better not second to of third quarter we

Daniel Bergeron

last in Right. quarter. Unless the popped the it month all

Peter Skibitski

Right.

Okay. the for Great. Thanks guys. help

Michael Hartnett

Yes.

Operator

you. Thank

Steve from with comes Barger question Markets. next KeyBanc Capital Our

line now Your open. is

Robert Barger

Good guys. morning

Michael Hartnett

Steve. morning Good

Robert Barger

XX% next doing are those you, three firm visibility the comment quarters? right your about the Do lines now back feel for half? the to Mike, business of it does well your into how's that's of like pretty business two

Michael Hartnett

the of business? You're talking side about the industrial

Robert Barger

response the about the earlier business the comment think that's doing Yes, gross to of you XX% in margin. it was made well had a I

Michael Hartnett

rock that's Yes solid.

Robert Barger

of some a you've are or visibility primarily mentioned standpoint? what product defense good are from the that lines Is the stuff that that already looking

Michael Hartnett

Well, defense. it's helicopter marine. certainly certainly It's

what yes. is the see see Let's there, in heck else

We there, have wind in Yes. Space. semiconductor.

Robert Barger

it. Okay. Got

Daniel Bergeron

And missiles.

Robert Barger

seeing to you comments any side on specific Are on opportunities distressed business? bid competitors around and new the industrial

Michael Hartnett

give some distressed business. aerospace seen competitors we've to Well, on to on side that and the bid us time for opportunity continues

by get the and seem we players and On are this balance through sheet a the able big side industrial people all to that to large pain. little be with with they periods compete like

Robert Barger

record track Okay. And operations your you guys over have of a long improving time.

in do make changes slowdown in the couldn't that given normal opportunities operating model procedural the to we're you you times? to internally structural see Just or do

Michael Hartnett

going combine they're second when which we Yes. too and we're one we've Absolutely. do on working quarter. and to of some plant one completed We're our operations busy this wouldn't a

the So yes rooftops. trying I mean we're reduce to

Robert Barger

Right.

would to expect flow then? this So statement income through you that year the

Michael Hartnett

Yes.

Robert Barger

be would It material?

Michael Hartnett

No,.

Robert Barger

And quarters certifications about in third-party underway? still from some in-house what I past about think to the you've talked of Okay. that wanting couple Is suppliers.

Michael Hartnett

sign Yes. just bit. auditors and margin but whip off to for We're waiting to immediately. our our ready little improvement they levels They're processes and be impact commissioned various delayed in It's will to agencies They're are come including underway. our our from the place. ready audited. and our be processes We're the OEMs a

Robert Barger

with much. Revenue, has cash one lower CapEx obviously come capital management. strong right and me, that Okay and for I last now down then free sorry working inventory flow just mean

do to much an continues of you have working an if unlock So how inventory you target revenue decline could idea cap? or mid-teens from

Michael Hartnett

discussion that had the about we our in inbound quarter the around short first is mean to much rates in term. were can basically turn do there the current you the and that I or operating not Yes. materials

down. brought operating So we and throughput as excess up plant ended excess with materials, whip expenses we the rates

in down materials maybe time to need finished those yes in million pare $XX goods, or there our finished overall and finished out of product turn of level package. goes but million liquidate them that on a with terms as and goods and will into $XX we liberation So we

Robert Barger

Okay. Thanks.

Michael Hartnett

Yes.

Operator

turn to this like closing to not the any time. Michael over Thank any back Hartnett showing Dr. further you. I call would remarks. questions for now at I'm

Michael Hartnett

now I to in Well and later up today where right we kind again year. and the attention of you call interest that Good Okay. everybody's to day. are the sums in speaking the appreciate in and look forward

Operator

and this today's Thank concludes participating. for gentlemen you Ladies call. conference

You disconnect. may now

Brooks Hamilton	IR, Alpha IR Group
Michael Hartnett	Chairman, President and Chief Executive Officer
Daniel Bergeron	Vice President, Chief Financial Officer and Chief Operating Officer
Peter Skibitski	Alembic Global
Michael Ciarmoli	True Securities
Steve Barger	KeyBanc Capital Markets

RBC Bearings (RBC) 7 Aug 202021 Q1 Earnings call transcript