ROLL - Earnings call transcript Q3 2022 | RBC Bearings Incorporated

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Operator

Good day, and thank you for standing by. Welcome to the RBC Bearings Fiscal 2022 Third Quarter Conference Call. At this time, all participants 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. now today, hand IR. Mike would to conference I host your Cummings Instructions] like the to over [Operator with Alpha go ahead. Please

Mike Cummings

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

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

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

Michael J. Hartnett

Products through of drag are through we on was November Industrial welcome. our Switzerland the three of report, of first operational is XXXX. Dodge the October financial but company This from quarterly acquired Boveri work Mike, performance all, completing months on this as in Okay. and to you, X. after the morning Dodge X, Two Thank acquisition acquisition mechanics good included and Asea experienced months November report of division Brown

the employees, customers and very relationship third and products, and and Dodge and more forward favorably relative an suppliers. our We investors, businesses $XXX versus materially of million fiscal two-month same a the large Dodge are into fully In family about industrial Bearings net for quarter look customers, with sales the base offering can $XXX.X for and new I’ll million Dodge fruitful, to platform mutually were of us to teams summary, $XXX of beneficial positions to and strengthen our increase RBC businesses visualize last welcome and excited pleased the long, were RBC this sales million period important The XXXX year, period. for talk exciting Bearings over later. XX%. of and an

$XX.X a compared net income sales sales. or the EBITDA XX% fiscal industrial year. million third quarter and the Adjusted million compared same of million for of products last XX.X%, the $XX $XXX.X of XX.X% to margin or represented net $XX.X million the and net to was for XX.X% operating sales, – $XX.X to sales XX.X% period quarter last for year’s XX.X% million of $XX.X products million, of the increase. net aerospace compares of representing XXXX, was XX.X% net of Adjusted sales. was This XX.X% For our sales XX%. or with gross

demand concur, others reported today the we and the industrial As through have roof. is

constraints, While many businesses. in capacity, result products, our demand mostly are industrial serve Dodge exceeds supply of as for sectors we cases, performing, chain a at industrial particularly the

cetera. the canning in Oil for has new from with ahead. and Aerospace increase which sure everyone here are [ph] bridges, Construction here and for – with to drive last lead-lag strong last your you sectors to sand when fill the of over it’s currently serve for flow we and in XXXX. Supply, gravel, typical linger Depot, warehousing, is Amazon, least knows both at increased We important cattle, very bite highways up very mile equation chicken, our the today and continues taconite, past Home and support and turkey, and offerings. A for Steel a a that Tractor That will demand centers through a months, to supply products. by our to build the the grow beverage, the nine vigor Target, first gas the XX half product for underway sector. continue bill tank. with strong. expect constraints strong, their demand that great months surface, I’m rush has infrastructure been strengths is proteins, have outlook mining, subsurface. we shortages Walmart, and improvements sample our problem Food beef, strategies in these story mile substantial In of is and worked the seen fiscal ankles fulfillment order et to

To Our mentioned, for consolidating. well new is plants of Intel, we others. products making to site Semiconductor integrated and businesses. much are strong Semiconductor machinery, and strong. every sectors have we we continues in all production. new very that the into industrial announced previous as industrial these demand Taiwan be been many have for Samsung, summarize, Billions is can as where result are distribution a by And the sector

to and defense. aerospace now Turning

of Weak quarter third fiscal the expansion. build we upon XXX be at it which but mentioned. to defense and by can the lumpy XX.X% year. expect sales up the OEM, by the rate, Our normalize X.X%, depending of dampened is net by plants, production the by end capping our XXXX led up These held postponement were sales previously milestone aircraft in schedules Also OEM quarter-to-quarter achievements the these XX.X%. down

major in planning and million, XXXX, rates for year expand as build MAX, AXXX. for our production results. and Boeing Important backlog are for up and their AXXX, next the Dreamliner single-aisle and planes over Our airframes the the Airbus are this sector beginning XXX $XX a XXX, the volume expansion lineup is XXX, we

the is quarters. by the to enough demand plane in succeeding plants We’re sure the make we ahead have our capacity often builders service that visited major in to that

million I’ll now sales And So $XXX and quarter, turn regarding our are $XXX over call total. for more the Rob the financial we Dan and expecting fourth million to in on performance. of details between

Robert Sullivan

the inventory $XX.X year. that XXXX $X.X already to was of Fourth expected Dodge inventory gross by $X.X covered, to the third acquisition. for gross was is a affected the $XX.X margin Mike. quarter quarter million for a step-up the XXXX for fiscal be to margin Mike margin third to you, Expanding fiscal XXXX related fiscal step-up by million period acquisition. affected related same of million, SG&A on Thank quarter compared the last million gross

associated in year-over-year. costs in increase from Excluding the business, with costs million the an is personnel primarily increase $XX.X Dodge

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

mainly the income the million period $X.X operating adjusted the of same of costs operating fiscal and $XX.X $XX.X $XX.X For XXXX. of $X.X to million $XX.X operating for period the million income expense year $XX.X of intangible the million XXXX have for quarter same fiscal Operating expense third consisted compared quarter XXXX in associated million Other million third assets, for and $XX.X last other of Dodge of third expenses been operating of million fiscal the acquisition, million costs costs. same $X.X to amortization intangible of related million million fiscal quarter with quarter items. $X.X assets for million adjusted included for income the to $X.X was would On compared of XXXX, for amortization for XXXX. was of non-operating fiscal and of last of third quarter income million items of basis, of operating restructuring of fiscal period income of the third of expense other Other other $X.X compared year. of the XXXX, an

of third For the fiscal debt postretirement of comprised charges items. domestic of were of expenses other million associated $X.X the a $X.X non-operating facility, of XXXX, elimination benefit costs of other million with quarter and million $X.X

of of For loss by million foreign $X.X non-operating on fiscal items. other other $X.X marketable exchange of comprised securities, and income XXXX, the of was offset quarter million $X.X third partially million of gains

for and cash for XXXX, share with per the the of the compared $XX.X an excludes of cash common to common items intangible $XX.X for available last EPS was fiscal Net EPS was fiscal $XX.X compared and per last loss the Diluted to of the the On third available the fees, For fiscal $XX.X for in the million depreciation EPS income our of third and income cash adjusted impact. $X.XX $X.XX the to $X.XX for stockholders net to quarter million for $XX.X stockholders adjusted compared period share XXXX, million $XX.X assets, $XX.X adjusted period On Adjusted of compared share same stockholders their last net available fiscal adjusted share diluted year. third same an was do of an cash for of share earnings same same fiscal $X.XX last $X.XX tax On of cash million year. year of non-cash an income fiscal $X.XX the the of cash stockholders. the a for million, cash the quarter XXXX by the the compared third last of financial adjusted last was to third basis, share per to basis, for of of income earnings last of that for quarter net common are quarter company compensation common negative net period XXXX share for million loss quarter Adjusted earnings year. per same stock million reported net and diluted period to deferred adjusted per net third for financing fiscal Diluted income useful period for to adjusted for performance compared XXXX year. same XXXX million assessing net income income the excluding fiscal million that income expenses fixed quarter $X.X the believe We net to negative not adjusted the period share quarter same period period basis, compared share third amortization per per to of $XX.X to per compared for $X.X available to was and same year. year. net was last quarter amortization XXXX, year. affect third per for million the XXXX

compared fiscal operating million third the for nine-month quarter fiscal XXXX $XXX.X year. million cash on the from for Turning the year of generated was adjustment was of and I like operator flow, million million the same $XX.X January question-and-answer to third quarter million year, for Dodge of quarter last debt to in hand $XXX.X operating from $X,XXX activities was for they spending submitted for last were capital X, million the fiscal $XX.X as nine-month company of $X.X compared activities to cash Total costs. period period last to and the would call XXXX the million million purchase $XXX.X this were in and now period same the $X.X XXXX related the Capital compared back the to post cash the to same $XX.X the cash approximately period turn for session. million. price acquisition for expenditures XXXX closing

Operator

first Global. you. question Pete [Operator from with comes our of Alembic And Thank Skibitski line Instructions]

is open. line go Your ahead. Please

Pete Skibitski

I missed a million? morning, missed in did contributed or $XXX say Mike, in you quarter the bit, I million Dodge good that. guys. sales a $XXX to Yes, little

Michael J. Hartnett

million. Yes, was think, I $XXX million. $XXX it

Pete Skibitski

million. $XXX

Okay.

Okay. up And sequentially backlog they backlogs, pretty us in because can contributed of was meaningfully. you terms give what

Michael J. Hartnett

I it $XX million. was think about

Pete Skibitski

million. $XX

Okay.

your at your you but to did any organic great did like going issues have slow sales sales all? industrial everything’s organic So because it sounds guns, industrial rise, that

Michael J. Hartnett

Yes. No. up, organic everything’s sales are I mean, industrial up.

Our legacy close RBC industrial business to XX%. was up

Pete Skibitski

Okay.

broad look at think one a There’s little below of I XX, that. have there’s that combined perception of let with dipped a inflation Okay. me the ISM, out so rising. PMIs bit there a market more. I’ll growth kind scare maybe there ask Mike, in out

me, you’re your not any a not in to growth of – scare industrial sounds markets. it kind like seeing You’re

it and a visibility capacity like fair You’re to that have as characterization? some talking adding that well. Is you sounds about

Michael J. Hartnett

we we could capacity the get the supply think of balance. I Right the to that’s If Well, materials have to execute. meet bit now, out chain half to the demand. support need we with a – us

talking work is fixing into problem, everybody other that listened And I’ve chain we the and calls, about has that too. it And so conference – the to all it’s they’re it. problem supply all going have

Pete Skibitski

Understood. Okay.

for the those And so historic we industrial FYXXXX FYXXXX for for It’s Rob, segmentation. the of going going maybe this and – one is be to aerospace forward. segmentation kind and new get so for will and the

Robert Sullivan

the defense that that’ll year-over-year full then for you’d afternoon, aerospace walk see nine versus And queue the at You’ll period picture. you’ll as month this month you the the down end, year in comes industrial. out see and then the expect, line XX

Pete Skibitski

Okay.

Thanks guys. Okay.

Operator

And from of line comes you. question with next Kristine Morgan Thank Stanley. the our Liwag

Your line Please is open. go ahead.

Kristine Liwag

Hey, guys. morning. Good

Michael J. Hartnett

Good Kristine. morning,

Kristine Liwag

the closing bit you anything I on the an update in on how going little congratulations we are most on so focused early for? deal. Dodge integration has you So what come so But far? in Can out And terms is a know is it’s should watch here. far? up near-term that of that there unexpected provide

Michael J. Hartnett

changes I hasn’t And ownership. unexpected say, the I been would acquisition. always is sort normal It’s to been to Well, an there’s unexpected material. just would – regard – not with in the here of

the things to moved entire that is that had corporate sort sort out of to site in another don’t So with into the we’ve January. and And think they that – of of basically deal site headquarters in settling December I they’re acquisition today. one I still their

So normal that’s not particularly thing that this an acquisition experience one and with we of size. a

bit challenging. that a was So little

systems getting agreement with – have currently computer our ABB to support place. in until in the also think with place just systems and I us are an ours computer we their

– of and it’s so making through we’re make. a and it and and it’s the lot focus BTUs And should that’s taking effort progress working

Kristine Liwag

Because we think got – And your the a normalized got acquisition about margin revenue for gross Thanks. mix, you’ve you of That’s of next How helpful quarter. mix color. the they there? the but noise. also I should guys volume margin? we’ve outlook mean, then provided should How some thinking level think about gross

Daniel A. Bergeron

this Dan. quarter, So I next for is think

of we year, again just year. like of expect For give the days. and of once for the quarter of that the at I then first on months right? the the holidays QX. than in end year. two and we’ll expect see following to on keep on get two we experienced conference there. the least color be in you see what should QX better in of it’s months the November full Dodge, which gross It And and QX December, that of be RBC, more production least the quarter, we fourth margins worst And year at to call in it’s is mind to packed But that amount But the was able next X%

Kristine Liwag

That’s I see. number? sequentially just said you to X point And versus Dan, confirm, that’s quarter, quarter next a percentage a year-over-year margin right? increase in this not gross

Daniel A. Bergeron

Yes.

Kristine Liwag

– in And Okay. What inflation Great. you from of could increases? it what And a you are customers? What seeing in able degree seeing squeeze if you are guys price chain then pass standpoint? how supply I to terms you to are unexpected and to or more. able your through one are

Michael J. Hartnett

for December, right November shin. chain Dodge the supply Well, and in the kicked

to see the think gross it it what And in expected rectified was. anybody was so And what situation and don’t – but margins. we January. we their I impacted that saw

Kristine Liwag

Well.

provide what you guys do rectify increase point jump, had with that’s a headwind in terms pretty more that that? you you next of meaningful a because especially the to to mentioned. what gives you gross quarter, little percentage confidence can X color So And margin the bit of

Michael J. Hartnett

did we things. a Well, few

we thing, some could did management thought did the significant One was to was account – we that was And of prices. next we things improvements… increase the do lead

Kristine Liwag

I’ll time, it person. appreciate guys. off And to next Great. pass I the the

Operator

with Goldman of And you. the Joe line question comes Sachs. next Thank from our Ritchie

go Your ahead. line please is open,

Joe Ritchie

Thanks. everyone. Good morning,

Michael J. Hartnett

Joe. morning, Good

Joe Ritchie

this this little we’re throughout business? out of aero you And your quarter? like probably being that MRO insight we I bit cover little a more quarter. from gave maybe So think maybe as defense companies you on bit weaker. then little bit defense some guys guess a how curious called give a us be I’m trend you that us just color to business I – weaker some is can trends the U.S. the And going does XXXX. I around know other hearing

So any helpful. color there would be

Michael J. Hartnett

Okay.

was Joe, first your So question? what

Joe Ritchie

that business did how MRO about this business quarter? the and really aero Just aftermarket

Michael J. Hartnett

we we quite much Well, is aftermarket, the don’t have well. do that aero doing business aftermarket aero in the but have

aircraft to up builders. call, is the aftermarket Isn’t It’s through and aircraft small so really distribution. And we approaching of they it And subcontractors levels. distribution that and call is see so very also and lot there getting distribution there. doing that what – business well. both A yet, pre-pandemic can is the not but aftermarket aircraft is small maybe major supplies our

rates. and they’re so wane And to with build wax going

Joe Ritchie

U.S. just That makes side, Got the defense what on about around commentary sense. the defense? it. And

Michael J. Hartnett

defense weakness to where strength. come where them. of great And The we us business, easy and have why products are great have pockets we that’s that strength, very normally, not of they – pockets to and we pockets make, of have complex we and have to make

go to what good don’t they we when the quarter. a And they’re quarter. sometimes to that’s expect happened And the And part go door to the in in plan. the according our out out that supposed door fourth of rectify

Joe Ritchie

it. Got

last impact now helpful. margins of like little is of That’s any around just thought the person bigger businesses, around terms detailed of for I’m disclosures there you’ve a businesses, being guys. bit granularity see we these the And can the bit providing little Okay. like in one forward that a one much like more so going the got mix block me, the covering just aero, maybe kind and easier? industrial new you and on curious,

Michael J. Hartnett

report, our of to you read wouldn’t confidential. It’s we it give competition could would to happy you. be guarantee that Well, if kind pretty

Joe Ritchie

they’d be sure interested guarantee Yes. But I I’m in can’t – that it.

Robert Sullivan

the the the segments as aerospace defense industrial, versus of – you’d margins within for footnote, then each at have segment You you’ll definition least the expect. get we will and the gross will of get

will So the that in be queue.

Joe Ritchie

thanks great I it will guys on. Okay, pass

Operator

from Thank Truist [Operator next our question Ciarmoli of you. Instructions] line And with the comes Securities. Michael

please ahead. is line open, Your go

Michael Ciarmoli

taking guys. data made I into morning for questions. It number. some on industrial adjustments first looks Thanks out the aerospace? basis, like industrial the and Aero of, moved guess, – segment segment good last you the Hey for level guess and I looking at one the year’s What trailing to

Michael J. Hartnett

is component was marine Mike, move, it’s industrial, but business The a the biggest marine The of product. defense right? business, historically classified within the

aerospace it So with over and was moved defense.

Michael Ciarmoli

it. Okay. Got

give then I are to And That know you here have us the an more we costs any us sense. modeling of have Okay. the to I you you for do transaction But other that full mean, out detail you amortization. fair with can ongoing expect what you for purpose? costs, of guys the or spelled planning kind makes on cost, any integration here? help value amortization? Were expectation modeling disclose step-ups plan to sort there of do just

Michael J. Hartnett

kind step-up of months onetime XX/XX, that costs Yes. I’d as another those quarter, in million about close of next of the we onetime of will XX acquisition cost, costs they’ll costs, incurred we’ve million additional say out and $X then we’re after majority another of million the I $X.X the over the fall amortization off. mean in acquisition And the $X.X will slowly say, are date to TSA bridged got fourth there. in come there the million expecting probably And quarter. the still the next quarter. the would earlier, out mentioned $X.X We’ve be, of inventory I

have offer next more call. on So, color we’ll to the

Robert Sullivan

million. around it is – $XXX depreciation and And amortization

Michael J. Hartnett

right. That’s

and to next be So quarter amortization is just under $XX depreciation going million total.

Michael Ciarmoli

did seems back $X are range, free – $X flow I and $X.XX depreciation, mean, I guys that back did should like it I’ve CapEx it X% seen talked adding cash trying just if add it’s depreciation. get Got again, EPS I’ve know never number. before. it. to fiscal you EPS. this, the XXXX, cash you depreciation, stock but that you’re X%, deduct like announced the to you I cash And a it. – comp. in And it guess, guys when mean, number, seems an mean never adding apples-to-apples, back what’s I to almost a I about you anybody I a probably guess adding back Got I seen Okay.

there wondering the process Just thought what was?

Daniel A. Bergeron

just Yes. just It’s Dan. this It’s our view – is cash our EPS. of

EPS we these what shareholders our taking income available noncash number. be to just have So if items, would cash the and didn’t tax effective, net

calculated. measuring So, we you in gave define EPS performance it number. that just We release. a on we’re it’s a And our press exactly the breakdown way our it’s cash how

Operator

And you. from next Thank with our Markets. the line Steve of Barger question comes KeyBanc Capital

ahead. go please open, is line Your

Steve Barger

Hey good morning guys.

compare Sorry, remembering late, a call XX-month on hopefully trailing growth for if ROLL we million, quarter And around this trailing revenue was right. on redundant. should to about think so track to And How how what trailing the base $XXX organic I XX-month base But in for that we or organic does this that’s Dodge isn’t the I’m contribution. think two-month quarter for I XQ? got industrial? that little basically

Michael J. Hartnett

issues is growth extent of muted Well, chain the I think don’t organic of some by growth that their kind sort organic growth to have. have where ROLL’s organic their supply supply be is. they could and chain We

little a integrated. that. of avoid more a And as bit we that, of result vertically some We’re

up of double-digits, So growth the it supply other be certainly get will better can the side that issues. could these probably chain but low their double-digits than if be in they and organic be on

Steve Barger

legacy say organic for – will term, the you what growth for your did you better for expect of business XQ? do And a an lack

Michael J. Hartnett

say but... didn’t We it,

Steve Barger

Would you to? like

Michael J. Hartnett

Well, it’s modeling. upper going single digits. we’re That’s the be to where in

Steve Barger

upper So your for Dodge the there, will saying actually business? do you’re double-digit better. single-digits low you legacy and I said – thought

Michael J. Hartnett

Yes.

Steve Barger

that aftermarket how since growth they Is for faster have are OEM? aftermarket them? And for much exposure, Okay. rate their growing you what’s seeing – growth versus so

Michael J. Hartnett

market. sort It’s an where or call XX% business their what of is thing XX-XX distribution aftermarket of they

XX% much And towards certainly, create that now is XX% right biased doesn’t servicing the it servicing so sway. that that well. and difficulty it’s the So XX%

Steve Barger

in reprice margins, general, know I you need the there in to that are portfolio? exit there product you’ve any lines And gotten to whole Dodge look good but has Right. or now at

Michael J. Hartnett

there is answer The yes. short

Steve Barger

Or portfolio? portion that small? the of Is is that a sizable pretty

Michael J. Hartnett

it’s of it’s to Dodge, but size it’s not It’s either. not material small, the relative –

Steve Barger

the opportunities productivity? or some well more drive through now been And terms CapEx kind for pretty automation that Right. programs? you’ve they to Do in of detail. that of are you in for robotics Or factories optimized see efficiency historical or

Michael J. Hartnett

XX% that just would factories part, and optimized. gotten most do They’ve they better the I the working at can pretty basically their through For time. of it factory haven’t still that say There’s too. XX% been are that one

So there’s still some there. upside

Steve Barger

you. always a Got just flow normal when when see and what lot you’re big last of I the consider there’s we And expect more know one. I a But cash just, to adjustments acquisition. integrating notwithstanding, we would charges complete free start you guess, that supply can from portfolio? chain

Robert Sullivan

I see of to as you’ll first say next year, enter into the start would quarter it. we

Michael J. Hartnett

Yes.

QX think slate clean clean pretty you be should I on think so QX. – I too pretty will see

Steve Barger

portfolio can remind revenue? flow free the do what of from you what cash you you terms free will And margin convert run entire Okay. or us a in expect cash flow just

Robert Sullivan

year and end number, year the that will definitely have in. when we’re our about baked year full baked a XXXX, of Dodge of RBC at but forecast into and a fiscal May given haven’t we talking we We full

Steve Barger

All right guys, thanks.

Operator

a Thank Global. of Skibitski you. with from the And have question Alembic Pete line we follow-up

open. is go ahead. line Please Your

Pete Skibitski

Yes.

to $X million income modeling stay a does for of of the that third other Just type that $X that of million quarter, time for for questions. that the The in kind of the you level? a kind quarter midterm step-up inventory couple and gave statement horizon fourth

Robert Sullivan

that fourth should will with That set we one. be be all the No. quarter, after

Pete Skibitski

in margin, Is out maybe have – just – And gone. goal bit you do – terms reach you of little the – you half a guys then Or gross believe of of mid-XXs, through walk margin any That’s – those was of improvements? goals? half adjusted in EBITDA that intend you of are? could it can the that us put a components sense it I what think you and Okay. SG&A to I how

Robert Sullivan

feel margin in then the consolidated the don’t we’re percentage line math XX% bleed tell we strong down to, of expecting going and improvement is but tell that, have of the alluded steady you, the as benefit in quarter the SG&A, can as the SG&A as EBITDA coming quarter see that. SG&A sales you full I gross right And to quarters, you will there, another really this start to I of a at Dan to is percentage can continue bleed that exact to to into number. the Dodge which

will of start take that kind we So get us and to. to where want to directionally

Michael J. Hartnett

Pete, And impact in are that referring I’d XX sales, you on And that impact and COGS, I also down broken to think the XX business anticipating we XX-XX, the probably synergies was end. were in say SG&A. but what thought programs, two well right? those on be than it’s And our but more all we’ve been started, would I XXXX only fiscal on months for in, we’re think – So synergies. target year we

we’ll on we the and numbers firm we quarter what think on have So about. more I what that, on the anticipated when talk game we’ll first And more probably year be report the for synergies. ahead of to for fourth

Pete Skibitski

color. Great. you. Appreciate the Thank

Operator

Liwag of Thank from the Kristine comes you. question And with line our Stanley. next Morgan

open. Please go is Your line ahead.

Kristine Liwag

that Hey like my earlier, have already. solved things all thoroughly. chain had guess, you follow-up. I with issue, issue Mike, the Dodge. the look on about guys, question found unexpected Is mentioned now you supply my time inflation thanks at factories And is the you taking to guys for at expected number to upside annually that far? there by number your potential that see downside in or close? or change run-rate $XX terms the $XXX from there change of to synergy you’ve Do acquisition is a million year of a seen to the so of what you fifth reason to million

Michael J. Hartnett

sense easy synergies where are. Well, of and got gone the the when factories we’ve a through

the is obvious if we do some those the embarked but we consideration to are And cost is RBC Is consideration somewhat lot first, now, could there upon some they them so throttled lightly. those And promote I of path manufacturing we that of think up pressure line in getting it right early capacity? so a that way I to best upon products of the we that another structure. And could a more opportunities are better And the what alternative some I the based decide products. we is be kind classic very there’s had with they is gross cost-effective their – traditional capacity, products there to want manufactured – of improve price market. cost things those a in – to and are use marketplace products think If and use – if margin, of growth if upside those here that which identified. think

to we mean, chase commit to to chase yes, de-commit do you want in expansion the do those gross you the margin? sales? one. once one of expansion So Or I you to other the paths, Because want in

we decision possible So to operating we do improve we’re trying we entire the to use the make on results make the of can what sure company. that – best

Kristine Liwag

that, the either or synergies margin expansion or gross I net mean see. these I synergies. of revenue going growth, the is through some of right, you’re synergies to either get through revenue cost

is be lot net $XXX So Or question my that looking a next million like is you doable? could better? a it basis, $XX to on would do

Michael J. Hartnett

it better, if a do we are – I Well, make to to lot say you XXX? we’re going going

Kristine Liwag

always a Well, time, I’ve long guys you covered you and beat for expectations.

but try find that where maybe just early, is, to it’s to ask, and of So medium too you kind right? happy – but hurts trying I’m can and

Michael J. Hartnett

Yes.

working this. And phase leave we’re goalposts they the let’s think are first still the right where on I of now.

Kristine Liwag

guys. Great. Thanks,

Michael J. Hartnett

Thanks, Kristine.

Operator

follow-up with Michael next line comes our Ciarmoli the you. question from Securities. Truist Thank And of

Please ahead. go open. is line Your

Michael Ciarmoli

the at supply Dodge, in just million were opportunity the chain. going guys, given bottlenecks the to with you extended like cost initially, year. components? chain suppliers course, tightness talked more of any $XXX you let initially dealing you the with accelerating of Has know the component lead It the higher per I on times contracts run one supply Have Hey of and their to sounded you but all those sort presumably thought accelerate? in-sourcing and about of prices. about

Michael J. Hartnett

anything right a make And steel. aren’t mean, issues now, major the getting that produce. the we we Well, has problem real steel. don’t industry I on

going we’re our Dodge, the to And in out use backlogs extent, steel to product. we’re to lesser moving to with regard because lead RBC everywhere so when to need a and we hedge times

cases, So steel is – steel has in doubled. some

with it’s think the wrestling something industry so I entire now. is that right And

Michael Ciarmoli

thanks, guys. it. Got Alright. Great

Operator

Thank time. like would you. over back remarks. this any to conference questions the showing no to turn Hartnett And further I at Dr. I’m further And for

Michael J. Hartnett

meeting, and and look your to Okay. with again. and forward questions your attention you Well, this comments I speaking we appreciate

the by I this expect and late again, And we of to good time about. news much have think May. May the some end pretty it’s we more by we have speak do we’ll

day. you, thank good So and

Operator

today’s concludes Thank call. participating. for This conference you

now You disconnect. may

RBC Bearings (RBC) 10 Feb 222022 Q3 Earnings call transcript