Q1 2023 RBC Bearings Inc Earnings Call
Hello, and welcome to the RBC bearings Q1 fiscal year 'twenty 'twenty three earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad as a reminder, this conference.
Is being recorded it's now my pleasure to turn the call over to Josh Harrow Investor Relations. Please go ahead.
Thank you operator, good afternoon, and thank you for joining us for RBC bearings fiscal 'twenty 'twenty three first quarter earnings conference call.
With me on the call today is Doctor, Michael J, Hartnett, Chairman, President Chief Executive Officer.
Daniel acres, your own director, Vice President and Chief operating Officer and Robert.
Ice President and Chief Financial Officer.
Before beginning todays call, let me remind you that some of the statements made today before it 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.
These factors are also described in greater detail in the press release and on the company's website.
A reconciliation of GAAP and non-GAAP financial information, including as part of the release is available on the company's website with that I'll now turn the call over to Doctor Heartbeat.
Thank you, Josh and good morning, well.
I'll start off by saying that our net sales for the first quarter of fiscal 'twenty three we're at $354 1 million versus $1 $56 2 million for the same period last year.
<unk> is 126%.
In the first quarter of 'twenty three sales of industrial products represented 72% of net sales aerospace products, 28%.
Gross margin for the quarter was 141.2 million.
39, 9% of net sales.
Compares to $63 8 million or 48% for the same period last year.
Adjusted operating income was $68 3 million 19, 3% of net sales compared to last year of $29 9 million and 19, 1% respectively.
GAAP EPS was $1 nine and new adjusted EPS came in at $1 79.
And Rob will explain this in more detail later in the call.
The quarter performance was very much in compliance with our expectations.
Right in the middle of the fairway.
A little lower on revenues in our guidance as a result of losing $6 million to $10 million from the shutdown of <unk>.
Shanghai, China, China plant and some unusual missteps by a forward rate manager.
Adjusted EBITDA for <unk> was 100, and $100 7 million 28, 4% of net sales compared to $45 3 million 20.
29% of net sales for the same period last year.
During the period, we paid down debt by another $125 million.
And our free cash flow was $51.2 million.
We entered the first quarter with a strong industrial sector, all components, including industrial distribution.
Food aggregate grain mining semiconductor machinery Marine wind energy were strong and the outlook here is more of the same for the next quarter.
Sales of industrial products were up by 2200 86, 8% from last year Arby's.
RBC organic growth for industrial products was up 17, 3%.
Turning now to aerospace and defense.
The first quarter of fiscal 23, net sales were up 10%.
The revival in production that Boeing is a welcome contributor.
There are plans to increase rates on the Max to over 506 hundred shifts in 'twenty, three and 'twenty four respectively from 330 today.
And Airbus Airbus sensor, a new pace of 708 hundred ships for the <unk> hundred 20 series over the same period.
Today, there are they shipped them.
We plan on producing 600 ships.
This brings a new and welcomed post COVID-19 volume to our factories, many of which were designed to capitalize over the past half dozen years to efficiently produce products for these important aircraft models.
As many of you already know RBC bearings was honored to receive the supplier of the year award from Boeing and their tier one supply chain conference in Los Angeles.
We've been a supplier to Boeing since the 19 forties.
The earlier and participate in every plane model currently produced and a great many defense products.
Boeing commercial aircraft is supported today by over 11000 suppliers.
We released to production of the Boeing 787 model aircraft is an important milestone event for us.
All of our plants produce many unique products for this claim.
Our content is substantial.
Obviously, we are applauding the resumption of production of this aircraft and are busy now reviewing client capacities to support the increase.
We're using 10 ships per month and 24 months out is are you planning bogey.
A word on our defense business. The outlook here is positive for new designs hardware and services.
New designs for advanced munitions aircrafts.
Submarines with expanded mission profiles.
It's very active right now and it's it's a pretty exciting place to work.
Our business supporting the construction of the Virginia, and Columbia ships continues to expand.
And we plan to add or add to our manufacturing and test facilities over the next 24 months to support these requirements for the next at least dozen years.
Yeah.
More on this this aspect in future calls.
Finally, given the deployment of U S made equipment to Europe in the past months Theres been a strong initiative underway here.
Or replenishment, okay munitions and as you can imagine.
We will be impacted by that.
Regarding the second quarter, we're expecting sales to be between 355 and $365 million.
The hour here and that range is all about.
Black chain.
Now I'll turn the call over to Rob for more detail on our financial performance.
Thank you Mike.
SG&A for the first quarter of fiscal 2023 was $55 8 million compared to $31 2 million for the same period last year.
As a percentage of net sales SG&A was 15, 8% for the first quarter of fiscal 2023 compared to 20% for the same period last year.
Operating expenses for the first quarter of fiscal 2023 totaled $20 9 million compared to $3 2 million for the same period last year.
For the first quarter of fiscal 2023 other operating expenses included $17 3 million of amortization of intangible assets $3 8 million of costs associated with the Dodge acquisition and zero point $2 million of other income.
For the first quarter of fiscal 2022. Other operating expenses consisted primarily of $2 6 million of amortization of intangible assets and zero point $6 million of restructuring costs and other items.
Operating income was $64 5 million for the first quarter of fiscal 2023 compared to operating income of $29 3 million for the same period in fiscal 2022.
On an adjusted basis operating income would have been $68 3 million for the first quarter of fiscal 2023 compared to adjusted operating income of $29 9 million for the first quarter of fiscal 2022.
Interest expense for the first quarter of fiscal 2023 was $15 8 million, including $2 3 million associated with the amortization of deferred financing fees. This compares to interest expense of <unk> 3 million for the same period last year.
Year over year increase reflects the addition of the term loan facility and our senior notes utilized with Dodge acquisition during fiscal 2022.
For the first quarter of fiscal 2023, the company reported net income of $37 4 million compared to net income of 24 million for the same period last year on an adjusted basis net income was $40 2 million for the first quarter of fiscal 2023 compared to $24 3 million for the same period last year.
Net income available to common stockholders for the first quarter of fiscal 2023 was $31 7 million compared to net income for 20 of 24 million for the same period last year.
On an adjusted basis net income available to common stockholders for the first quarter of fiscal 2023 was $34 5 million compared to $24 3 million for the same period last year.
Diluted earnings per share was $1 nine for the first quarter of fiscal 2023 compared to 95 cents for the same period last year.
On an adjusted basis diluted earnings per share for the first quarter was $1 19 compared to adjusted diluted earnings per share of <unk> 96 cents for the same period last year.
Starting this quarter you know future releases, we reflect a newly defined adjusted earnings per share.
In recent months its become clear everyone's a bit all over the place and how theyre considering earnings per share and we've listened to feedback from our shareholders and we believe this new metric well best reflect the ongoing performance of our business to be clear in future periods, we will no longer report cash or earnings per share or historical adjusted earnings per share which only.
Considered foreign exchange discrete and other unusual tax matters and other nonrecurring or unusual items.
The new adjusted earnings per share will reflect adjustments for one time or unusual items foreign exchange discrete and other unusual tax matters amortization of M&A related intangible assets amortization of stock based compensation and the amortization of deferred financing fees.
For the first quarter of fiscal 2023. This new adjusted earnings per share was $1 79, compared to $1 22 per <unk> for the same period last year.
This year over year improvement reflects the significant benefits provided by the Dodge acquisition. Please refer to our press release filed this morning for the first full calculation.
Turning to cash flow the company generated $59 million in cash from operating activities in the first quarter of fiscal 2023 compared to $53 3 million for the same period last year, we made a strategic investment in our inventory during the current period, which impacted the operating cash generation capital expenditures were $7 9 million in the first quarter.
Fiscal 2023 compared to $3 4 million for the same period last year.
We paid down $125 million on the term loan during the period, leaving total debt of 1.565 billion as of the end of the period and cash on hand was $119 6 million.
Finally, I wanted to offer some brief details on the restatement of our 10-K previously filed in May this.
This restatement arose out of the company's reexamination of the timing of the recognition of stock based compensation expense associated with certain executive awards.
Under U S. GAAP the recognition of compensation expense associated with these awards should have been accelerated due to certain clauses in the agreements associated with voluntary termination.
The results of these adjustments is it expense that would have previously been recorded in fiscal 2023 and future years has been recorded in previous periods. The impact in fiscal 2022 was an additional $9 million of pretax compensation expense.
The impact in fiscal 2021 was a reduction in expense of $3 2 million and.
Any impact in fiscal 2020 was an additional $7 4 million of pretax compensation expense.
Portly these adjustments related to a noncash expense item and impacts the timing of the recognition rather than the overall amount of the compensation expense there.
There was no impact to our historical non-GAAP adjusted EBITDA as we traditionally exclude stock based compensation from that metric.
As a result of these adjustments the total expense recognized in fiscal 2023 is expected to be less than previously anticipated, including a reduction of more than $5 million for the total for the rest of the fiscal year.
I would now like to turn the call back to the operator for the question and answer session.
Thank you well now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he'd like to move your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset.
Before pressing star one one moment, please while we poll for questions. Our first question today is coming from Kristine away from Morgan Stanley . Your line is now live.
Hey, good morning, guys. Good morning, Corey I guess afternoon sorry.
So so first of all congratulations on winning the Boeing supplier of the year Award, presumably Boeing would want more of a supply chain to execute like you guys. I mean to what degree does this recognition potentially unlock expansion of scope of work.
Hmm.
Well, we're you know we're waiting to see how that how that plays out Christine it.
We were you know were clearly I'm sort of in the winter circle in terms of.
Our new work coming from Boeing and.
And so we are you know we're working through our bids on on other.
Products Boeing is.
I guess, it's well known that they have a lot of supply chain issues and.
Suppliers that didn't make it through the COVID-19 period for financial reasons or.
Or or.
<unk> reasons or shortage of flavors and and so they're looking to move to move work and and I think we're probably in a very good position to.
To achieve some of that work.
So too early to tell.
You know what the what the ultimate.
Benefit is gonna be.
But I like that.
Well we are.
That's great and if I could do a follow on question on Dodge.
But when you look at RBC bearings. Historically, you guys have performed and been very defensive across our different cycles I mean.
Looking back in the past 10 years gross margins didn't dip below 35% and even going back to you now data post the IPO I mean gross margins never dipped below 30%. So given the uncertain macro backdrop, we're facing today can you provide more color on how Dodge changes your.
The defensibility of your portfolio and how you'd expect them to perform in an industrial recession should we see one I mean with 60% recurring revenue a dodge is it more or less defensible on top and bottom line versus RBC bearings on a legacy basis.
Yeah, Oh well.
You know I think roughly 80% I'm rounding now or doctors revenues are coming from industrial distributors.
Industrial distributors, if you talk to any one of those industrial distributors.
They will tell you that 50% of their revenue is is what they call a break fix revenue. So there is something broken in one of their plants that they service and so they they supply the replay.
Our replacement part to that to that plant.
And so a heavy theres a heavy concentration of Dodgers business is associated with this.
<unk> fixed component of.
The U S infrastructure and that infrastructure is aggregate its brain. It's it's.
Yeah. It's.
You know what they call you you entered handling and and so it's it's a it's very integrated into.
And to the U S. GDP, so I think the Dodge when you look at the Dodge revenues over over that same period.
There are lower beta revenues, then rbcs because RBC is here.
It's more direct OEM business, so we might be supplying somebody like a caterpillar and you know depending upon what systems you're out you're supplying a category you can be up or.
Wow, you can be down a lot and Dodge doesn't have that variability in their makeup.
That's great and then with the loss of that variability in the top line, presumably margins also would be more stable is that a fair assessment.
That's a fair assessment.
Great I'll pass it onto the next question. Thank you.
Thank you next question is coming from Steve Barger from Keybanc capital markets. Your line is now live.
Thanks.
Rob Thanks for the explanation on the new adjusted EPS I just to make sure I understand when you report to Q, we'll see a GAAP result, and then the adjusted number that you will focus people to be comparable to the $1 79 that you referenced for this quarter, that's exactly right those would be the only two that will reflect.
Nice quarter.
So you would expect consensus to reflect more of that 179 basis that would be what we would expect.
Got it that's perfect I'm going to ask that industrial question, maybe in a slightly different way when you think about the combined industrial business and how that'll grow relative to the cycle. You know just to to be more quantitative if if I P or industrial production is plus 5% what would you expect your <unk>.
Business to be up and then same question, if I were to be down 5%.
[laughter].
Oh.
Well I I can I can tell you if IP were up 5%.
We would have difficulty supporting all the.
The order book.
Order book would.
It would be extremely demanding actually when it's when it's above 3%. It's a it's very demanding.
Five 5% that's probably.
You know.
Just with a purchase manager index of something like 55 to 58, that's those.
Kind of track each other and in those in those neighborhoods were as busy as it can get.
When it goes negative 5%.
Yeah, Steve I really don't want to think about that.
[laughter] well.
I mean, you you just went through it in and the pandemic right in an IP is running about 5% right now. So it is the order book hard to keep up with as it stands today.
You're watching notwithstanding.
Yeah.
Order book is is it still outpacing our ability to deliver them.
And that that's mainly a supply chain thing, we certainly have the the eternal plant capacity, but we are we are having.
Pickups, particularly.
Particularly in the dark side not on the RPC side, but on the di side.
With our supply chain matters and.
And that way.
When we do our revenue.
Revenue guidance.
There's an incredible amount of work that goes into.
The calculus.
Associated with getting to those revenue numbers and and.
And so we try to make them conservative.
But realistic.
And.
So.
You know if there's.
If theres some.
Supply chain breakthroughs, then there'll be a.
Now a very pleasant you know revenue.
Prize at the end of the quarter.
You know the supply chain problem is getting better.
As we as we bring on basically additional suppliers.
And in some cases, we convert some of the RBC.
Classic plant manufacturing.
Two two.
Some of the shortages that we have.
So and that's you know that's working better as you as you introduce it in and work it and it matures.
So I think but I do think it's going to be with us for the rest of this year.
Yeah for the revenue guide for two Q, how much did you factor in as an offset for supply chain.
Well I know what the number is but I don't want to tell you.
Okay.
Is it less than you factored in for your <unk> Guide.
No. It's the same.
Yes.
And do you expect Dod revenue contribution will be up sequentially.
Yeah I do.
Got it alright, thanks, I'll I'll pass it along.
Thank you next question is coming from Seth Weber from Wells Fargo Securities. Your line is now live.
Oh, Hey, good afternoon guys.
I wanted to ask the margins were actually better than what we were looking for both on the gross margin and EBITDA margin. So I'm just trying to understand.
And maybe where you're at from a price cost perspective.
Would you expect price cost to be getting better.
Through the balance of the year are you on the positive side of that or just any framework you can give us for.
What you saw in the first quarter relative to expectations for the rest of the year. Thanks.
Yeah well.
I think I think price cost is he is going to get better.
Particularly as it relates to supply chain, you know and have half of doctors cluster sales in rough numbers.
Our our.
Supply chain.
Supplied.
And so there's transportation expense there.
And in the past quarter theirs.
You know air freight from Asia there.
That's that's going away.
The cost of diesel is seems to be.
Moderating silver transportation expense.
Come down and we see the.
Prices of some of the basic commodities you know backing off.
So you know that's that's telling us that.
That that cost.
Pressure.
Should be.
Relieved.
Time goes on.
We didn't see it really see any relief in the in the first quarter.
And we're not planning to see any material relief in the second quarter.
Okay and would you would you keep the price increases that you're.
That you're pushing through it even in a lower input cost environment.
Well I mean, we'd have to.
Evaluated product byproduct, an account by account and let's see where it all comes out you know it's.
That's a hard question to answer.
We wouldnt, we wouldnt accept what in some cases, and we probably back down or in other cases and and so it's a it's very tactical.
Yeah.
Okay and then just my follow up question.
You've mentioned now for a couple of quarters, adding capacity on the Aero side, and I think I heard you kind of referenced adding some capacity on the defense side as well can you just.
Put some timing around that it sounds like defense, maybe a little bit further out but when would you expect this extra capacity to start to help you.
Well on the Aero side, we you know we don't have to add the capacity Aero side in terms of <unk>.
Capex and that sort of thing because because we we were you know at a gallop there before the pandemic hit.
We wanted to get sort of what it looks like we're going to get back into those close.
So it's really adding it's adding manpower.
And and that's you know that's a these.
These days, that's not easy to do but it's doable.
And so you'd have to go out and.
B and be creative about where do you look for people and how you attract them to your company. So so that's that's on the aerospace and the industrial side that's it.
It kind of answers that question on the defense side, Yeah, It's a little further out.
We have proposals into.
Into the some of the defense agencies with regard to.
What we'd like to add for.
But we think should be added four.
<unk> and.
They've been.
Favorably received and it looks like well.
We received some funding.
Got it okay. Thank you guys appreciate it.
Thank you as a reminder, that star one to be placed in the question queue.
Next question is coming from San Francisco <unk> from <unk> Securities. Your line is now live.
Hey, guys my Chipotle to that.
Hoping I think you touched on this a little bit regarding pricing, but is there any particular aspect of supply chain, whether it be specific parts of raw deals where you got it.
Increase in lead times or maybe some pressure there and then kind of building off of that again briefly touched on prior but regarding the labor are you guys finding any additional needs, they're bringing on capacity on that front.
Yeah, well on the labor side, we definitely will.
Have to add labor.
You know this this buildup of the seven.
787.
Production volume is pretty significant for us or others.
Yeah, there's no way that we're going to be able to do that without adding labor.
And but it's it's a manageable amount of.
The amount of labor requirement.
So it's.
It's.
The second part of your question was those materials.
Yeah. Just if you guys are feeling any particular supply chain pressure, whether it'd be lead times or just pressure, whether it's any particular parts of raw materials, where you went to Chile not.
Well, yeah on raw materials and of course, it's titanium and ER.
Titanium is always an issue and depending upon who you are who you are so.
You're you're working for.
It.
It can be it can be a challenge it can be very costly and.
And so there's there's various strategies that we.
Can employ there Duke employed right.
But yeah, we can.
We can buy if we're supplying Boeing we can probably titanium.
You know from our suppliers.
Grocery and price that Boeing had had negotiated with that supplier for people like us.
And.
And Boeing tells US there's absolutely no issue at all with the availability of titanium they've got that covered.
So I hope Theyre right.
Yeah with regard to some steels.
You know some of the some of the steels are pretty exotic and pretty sophisticated and our lead times on some of the skills or you know a year 50 weeks.
Some of it.
Courtney Steel's are made by people who went bankrupt.
And.
Early staying alive and.
So some of the big Planemakers and their subcontractors larger subcontractors.
Doing some extraordinary things to keep those people alive, but you know that's that's always a concern.
Great. Thank you.
Thank you next question is coming from Joe Ritchie from Goldman Sachs. Your line is now live.
Hi, Good afternoon, Hi, Joe Yeah.
Yes, a few quick ones for me.
I think I recall the last the last time, we chatted.
We were we were anticipating the first half gross margin to be about 100 basis points higher than where you exited fiscal 'twenty Q. It looks like the start to the year. He's got maybe a little bit cut off a little bit slower than expected or below the 14 number do you guys still expect you know the first half T M.
It'd be about 100 basis points higher.
Where do we end up in.
Yeah, I think that the way we're looking at is dead.
Over the course of the year, we should start to see that improvement, but it's always lumpy during the year I would expect the second quarter gross margins to look quite similar to the first.
And I just talked about are our strongest quarters Q4.
So.
Okay. That's helpful. And then I guess I, maybe just kind of parse out I know that you guys didn't have a lot of our international exposure, so probably less worse affected by FX then there's been a lot of other companies we cover.
But I'm just curious like the industrial organic growth number for this quarter I don't.
In here you guys gave it earlier I mean, we're calculating something like 17% is that is that what you saw come through in the quarter Southern California three yeah.
And that's mainly okay.
Okay, Great and then I I'd actually be curious just to hear you know any trends that you're seeing in the business as you progressed through the quarter, obviously, 17% is that it.
It's a very healthy number a lot of concerns out there around industrial activity following any any thoughts around what you're seeing in that business and any trends that you saw intra quarter.
We have a few really good key markets that are doing well construction and mining semi con.
Oil and gas and at the same time I think we're starting to see some activity.
Our synergy on on cross training Dodge a sales team and our V C sales team.
And so with a 17, 3% growth rate on industrial mainly in the U S.
I mean, it will more than double.
If any of our competitors.
For year over year with a quarter.
Kind of where we're going up against.
But for us the big the big markets like I said, our construction and mining side would be the caterpillars komatsu side of the world oil and gas semiconductor.
General industrial distribution.
Just without Dodge our general industrial distribution business, what was up 11, 6%.
And organically and our OEM business was up 21%.
Okay. That's helpful. Thank you.
The next question is coming from Ron Epstein from Bank of America. Your line is now live.
Yeah, Hey, good good afternoon, good morning.
Hello.
Just a couple of quick.
Two questions.
It is the plan to still pay down 300 million of debt this year.
The plan is to accomplish 300 million this year 400 cumulatively since the acquisition that's right.
Okay, Great Super Super and then I guess.
You know one other thing that kind of came out in the release, you mean, what's being done to address the material weakness in our financial controls.
Yeah, we're taking internally we are reevaluating the processors that are in place regarding employment contracts as they relate to compensation and will be adding additional controls regarding the legal and accounting review prior to the time of grant.
Gotcha Gotcha, Okay, great. Thank you.
Take the next question is a follow up from Steve Barger from Keybanc capital markets. Your line is not a lot.
Hey, Thanks, guys was there anything outside of Shanghai and supply chain that impacted one key revenue like was there any FX impact.
Very minimal FX impact during the during the period and all things considered obviously the European rates moved away they did but I noticed that Mike hit on where the bigger drivers.
Okay.
Hum.
Can you remind me if anything changed around seasonality for three Q with Dodge included I think historically, it typically steps down a touch from two queue before the ramp to the four Q peak.
So you can expect that going to have the same holiday seasons that we have Thanksgiving.
Christmas census, shortest amount of production days for both companies.
Yeah Okay.
And you know historically <unk> been really good at taking an analytical approach to things. So as you look across your end markets and your existing customers do you see more value right now and going after more wallet share or in entering new markets because presumably the former has a higher returns than the latter.
Well you know.
Yeah.
We have a lot of a lot of new products coming through the coming through the system.
Almost too many.
In terms of I mean, you can't you can't get behind all of them.
And you have to you have to pick the big winners and so right now as far as God Dodge is concerned.
We're sorting through you know what they have for product development, which is extensive and which products.
How mature are there yeah.
Are there developments how far along is the product.
Technically and how far along are we in terms of understanding the market need.
And you know, what's what's scalable and in terms of those products and that's the process that we're going through right now with touch.
And.
I'll tell you it's it's.
Keeping us busy theres, a theres a lot of there's a lot of.
But it would to cut there and and so I think in terms of adding new products to the existing market channels.
A very.
Very good.
Our recipe for success is at a place as it's certainly is at a place of dogs.
No RBC on the other on the other hand has.
As you know to a large extent, particularly in aerospace and defense is completely different.
Lineup in terms of customers and <unk>.
Market channels and.
And so we've kind of gone through the RPC agenda over the years and know.
Which ones are the.
Are the ones to back and and it's it's it's pretty much product introduction to existing markets.
And then I think second secondarily to that is how do you.
How do you map RPC across alright gotcha.
<unk> markets, so that you're actually.
Picking up.
Revenue by introducing.
New accounts to existing products.
So that's you know those are the those are the two big legs on the stool that we're we're working on right now.
And realistically how long does it take to effectively complete that mapping processes that years or quarters.
We're quite we're quite well I mean, if it never ends Steve It really never ends.
Because theres always you know theres always more coming through but we're quite far along on some of these programs in terms of in terms of Dodgers program.
Yeah, and and so and others are at the initial stage at the end of their technical development, but at the beginning of their.
Market assessment so.
Yeah, I think I think we're going to have some good things to talk about.
Great and just one more just looking at the segments will aerospace always have intrinsically higher incremental margin than industrial or should they be even overtime.
They tend to be quite close over time you know.
It depends on the period and what's going on but if you look at the history, there and really not that far apart.
Thank you. Our next question is coming from Pizza Kubicki from Alembic Global Your line is now live.
Hi, guys, sorry, having trouble getting into the queue there.
Yeah, Mike maybe just to start on the Shanghai plant is revenue wise as the plant reopened again as of the start up to Q.
Yes. It is.
Okay. So we should get that revenue back and then Andy would you guys be willing to quantify the impact of the I think he called it unusual freight misstep in the corner.
Yeah.
It was that is that impact with somewhere between two and $4 million.
Okay and then the issue has been it sounds like a one time issue.
Yeah, you know it was.
Yeah.
It's an unusual issue for this particular forwarder it it hasn't happened in the past that anybody can remember.
And so where we're getting involved with why it happened this time.
And what we can do to help and got it.
Okay.
Fair enough, maybe on industrial they're kind of switched the metric a little bit from you know from IP and.
In the past, Mike you've talked about PMI is a lot in it.
It's great. When PMI is we're about 55, and we've seen a little bit of a deceleration recently I'm just wondering as we sit here in August over the last you know a month plus are.
Are there any signs of deceleration in demand at all for your industrial end markets or is it just not really something that's visible right now.
Certainly for classic RBC, where we're definitely not seeing it.
We're not seeing any deceleration.
And in Dodge.
It's.
There their business is lumpy.
And you know, but when we look at the markets that they serve.
You know.
I agree.
In the aggregate market.
Hum.
From what our field people are telling us.
There's no capacity left by aggregate producers there are 100% there they're 100% full.
And we have now this infrastructure program coming through that's going to throw.
Throw gasoline on the fire.
Grain is grain you know what's going on in the world with grain.
And so you know what.
Farmers are you now.
Running running their machinery, and and breaking things and needing replacement.
Hum.
Our our food products have been really well accepted by the industry.
And that's a that's a growth leg for us that's it's early stages and we have we.
We have been.
We have a lot of demand for these new products out of Dodge that.
Address and manufacturer of food.
And so we think that those markets are.
Are going to continue and we haven't seen we haven't seen them then let up.
We have seen some backing off of what.
What they call unit handling.
As a result of Amazon.
Canceling.
What 40 or 50 different warehouses.
So there's been some backup there protects.
Frankly, that's probably going to expand our margins.
Okay. Okay. No I appreciate all the color last one for me. So I take it you guys are still expecting them to generate 400 million in adjusted EBITDA. This year. So is that on track.
Well certainly with the first quarter, we're trending in that direction yeah.
Okay, great. Thanks, guys.
Okay. Thank you.
Thank you we reached end of our question and answer session I'd like to turn the floor back over to Dr. Hartnett for any further or closing comments.
Okay, well I appreciate the the involvement of everybody in the and the questions today and thanks again for your interest in RBC bearings and.
This is a patient participation in the call and we'll speak again in.
October .
Good day.
Thank you that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.