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RBC Bearings Incorporated (NYSE:RBC) Q3 2024 Earnings Call Transcript

RBC Bearings Incorporated (NYSE:RBC) Q3 2024 Earnings Call Transcript February 8, 2024

RBC Bearings Incorporated misses on earnings expectations. Reported EPS is $1.85 EPS, expectations were $1.91. RBC isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings, and welcome to the RBC Bearings Fiscal 2024 Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. Question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Josh Carroll with Investor Relations. Please go ahead.

Josh Carroll: Good morning, and thank you for joining us for RBC Bearings fiscal 2024 third quarter earnings conference call. With me on the call today are Dr. Michael Hartnett, Chairman, President and Chief Executive Officer; Daniel Bergeron, Director, Vice President and Chief Operating Officer; Robert Sullivan, Vice President and Chief Financial Officer. Before beginning today's call, let me remind you that some of the statements made today will be forward looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected or implied due to a variety of factors. We refer you to RBC 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.

A skilled machinist inspecting a precision bearing for a aerospace/defense application.
A skilled machinist inspecting a precision bearing for a aerospace/defense application.

These factors are also described in greater detail in the press release and on the company's website. In addition, reconciliation between GAAP and non-GAAP financial information is included as part of the release and is available on the company's website. With that, I would now like to turn the call over to Dr. Hartnett.

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Michael Hartnett: Thank you, Josh, and good morning, and welcome. Net sales for the third quarter of fiscal 2024 were $373.9 million. This represents an increase of 6.3% from last year. And I'm happy to report this is within our guidance range on revenues. The third quarter of 2024 sales of industrial products represented 65% of net sales with aerospace products at 35%. As a footnote over the past five years revenue growth at RBC has been a compounded rate of 16.8%. Gross margin for the quarter was $158 million or 42.3% of net sales, again within our range. This compares to $146 million or 41.5% for the same period last year, an 80 basis point improvement. We continue to see year-on-year improvement in gross margin, as we continue to strengthen operational performance and improve both absorption and methods in our plants.

This quarter because of fewer production days, leading to lower overhead absorption, margin is normally the lowest of the year. It's historically bounced back in Q4 and there's no surprises here. We see this effect every year. Overall, profitability continues ahead of plan, year-to-date and to reconfirm, we expect to finish the year in the low to mid-40% range on gross margins. Again our hats are off to the RBC team for this performance. We all understand that we are in business to service our customers to the full extent of our abilities with high quality and service levels is always our first priority. More than 70% of our revenue are from products where we are – sole or primary source. Our customers have learned over the years they can trust us.

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To continue reading the Q&A session, please click here.