• Net Sales: $398 million, a 3.2% increase year-over-year.

• A&D Sales Growth: 12.5% year-over-year, with defense up 17.3% and commercial aerospace up 10.3%.

• Industrial Segment Sales: Down 1.4% year-over-year; OEM down 2.5%, aftermarket down 0.9%.

• Gross Margin: $173.8 million or 43.7% of sales, a 55 basis point increase year-over-year.

• Net Income: $67 million, up 6% year-over-year.

• Adjusted EPS: $2.29 per share, compared to $2.17 per share last year.

• Cash from Operations: $43 million, compared to $53 million last year.

• Debt Reduction: Over $35 million in the quarter, with a year-to-date total of $128.7 million.

• Adjusted EBITDA: $123.4 million, up 1.1% year-over-year; margin of 31%.

• Interest Expense: $15.6 million, down 22% year-over-year.

• Tax Rate: 22.1%, consistent with last year's rate.

• Free Cash Flow Conversion: Approximately 100% of net income for the first six months of fiscal 2025.

• Third Quarter Revenue Guidance: $390 million to $400 million, representing 4.3% to 7% year-over-year growth.

• Third Quarter Gross Margin Guidance: 42.5% to 43.5%, an increase of roughly 70 basis points year-over-year at the midpoint.

• Warning! GuruFocus has detected 6 Warning Sign with RBC.

Release Date: November 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RBC Bearings Inc (NYSE:RBC) reported a 3.2% increase in net sales for the second quarter, driven by strong performance in the Aerospace and Defense (A&D) segment.

• The A&D segment saw a 12.5% year-over-year growth, with defense sales up 17.3% and commercial aerospace sales up 10.3%.

• Gross margin improved to 43.7% of sales, a 55 basis point increase year-over-year, attributed to increased absorption in A&D capacity and ongoing synergies from the Dodge acquisition.

• Net income rose by 6% year-over-year, translating into an adjusted EPS of $2.29 per share, up from $2.17 per share last year.

• RBC Bearings Inc (NYSE:RBC) reduced its debt by over $35 million in the quarter, with a year-to-date debt reduction of $128.7 million, positioning the balance sheet well for future acquisitions.

Negative Points

• The industrial segment experienced a 1.4% decline year-over-year, with OEM sales down 2.5% and aftermarket sales down 0.9%.

• Unexpected headwinds, including a Boeing strike and the impact of Hurricane Beryl, resulted in a revenue impact of $4 million to $5 million during the period.

• Cash from operations decreased to $43 million compared to $53 million last year, primarily due to the timing and scope of cash tax payments.

• Adjusted EBITDA margin decreased by 66 basis points year-over-year to 31%, despite being above the full-year 2024 margin.

• The company faces uncertainty regarding Boeing's production rates, particularly for the 737, which could impact future revenue projections.