Overview

RBC Bearings is a well-known international manufacturer of highly engineered precision bearings, components and essential systems for the aerospace, defense and industrial industries. The company operates in two reportable business segments: Aerospace/Defense and Industrial.

Financial Performance

• In fiscal year 2025, RBC Bearings’ net sales increased 4.9% to $1,636.3 million compared to the prior year. This was driven by a 14.1% increase in Aerospace/Defense segment sales and a 0.2% increase in Industrial segment sales.
• Net income attributable to common stockholders increased 25.0% to $233.8 million in fiscal 2025 compared to $186.9 million in fiscal 2024.
• Gross margin expanded from 43.0% in fiscal 2024 to 44.4% in fiscal 2025, reflecting improved product mix, pricing, and cost efficiencies.
• SG&A expenses increased 10.2% to $279.3 million, primarily due to higher personnel, IT, and professional fees.
• Interest expense decreased 23.9% to $59.8 million due to debt reduction efforts and interest rate management strategies.
• The effective tax rate was 21.1% in fiscal 2025 compared to 19.8% in fiscal 2024, with the increase primarily due to the impact of discrete items.

Segment Performance

• Aerospace/Defense segment sales increased 14.1% year-over-year, with commercial aerospace up 13.3% and defense up 15.9%. Gross margin in this segment was 41.0%.
• Industrial segment sales increased 0.2%, with distribution and aftermarket sales up 1.4% but OEM sales down 2.1%. Gross margin in this segment was 46.3%.

Outlook and Liquidity

• The company forecasts net sales of $424.0 to $434.0 million in the first quarter of fiscal 2026, representing growth of 4.4% to 6.8%.
• Backlog increased to $940.7 million as of March 29, 2025, up from $821.5 million a year earlier, reflecting continued growth in demand.
• Operating cash flow was $293.6 million in fiscal 2025, up from $274.7 million in the prior year. Capital expenditures were $49.8 million.
• The company has a $1.3 billion term loan and $500 million revolving credit facility, as well as $500 million in senior notes, providing ample liquidity to fund growth initiatives.

Strengths and Weaknesses

Strengths:

• Leading market positions in highly engineered precision bearings and components
• Diversified end markets and customer base
• Successful history of acquisitions and integration
• Strong cash flow generation and liquidity

Weaknesses:

• Exposure to cyclical end markets
• Reliance on raw material inputs subject to inflation

Outlook

RBC Bearings is well-positioned for continued growth, with strong demand across its Aerospace/Defense and Industrial segments. The company’s focus on innovation, customer diversification, and aftermarket sales should help mitigate cyclicality. With a solid financial position and liquidity, RBC Bearings is poised to capitalize on opportunities for organic and inorganic expansion in the years ahead.