Key Highlights

  • Net sales grew 15.2%, with aerospace and defense up 15.8% and industrial up 14.8% in the fiscal second quarter.
  • Adjusted EBITDA rose 20.4% to USD 175 million, a 33.4% margin, with adjusted gross Margin of 45.6%.
  • Adjusted diluted EPS was USD 3.74 versus USD 2.84, while free Cash Flow was USD 85.7 million.
  • Third-quarter Revenue guidance of USD 525 million to USD 530 million implies growth of 12.7% to 13.7%.

Sales and Margins Advance

RBC Bearings Incorporated (NYSE:RBC) reported fiscal second-quarter 2027 net sales growth of 15.2%, ahead of its expectations. Gross margin was 45.6% on both a reported and adjusted basis, against 44.1% reported and 44.9% adjusted a year earlier, reflecting higher volumes through production facilities, contract renewals and favorable mix. Selling, general and administrative costs were USD 83.4 million, or 15.9% of net sales.

Adjusted EBITDA was USD 175 million, or 33.4% of net sales, up 20.4% in dollars. Adjusted Diluted Earnings per Share were USD 3.74 versus USD 2.84, using a 22.0% tax rate in the adjusted calculation.

Aerospace, Defense and Industrial

Aerospace and defense represented about 44% of sales and grew 15.8%, with gross margin of 42.2% versus 38.7% a year earlier. Industrial represented about 56% of sales and grew 14.8%, or about 14% excluding USD 2 million from PSC, acquired in August. Industrial OEM revenue increased 24.2% and distribution revenue 10.6%, with growth across aggregates, metals, food and beverage, warehousing, semiconductors, grain and power generation. Industrial gross margin was 48.2%.

Chief executive Michael Hartnett said the company is working to triple its output of submarine components from a baseline, with about 30% of that goal complete and expansion planned through fiscal 2028. He acknowledged that marine production is behind plan because of Supply chain difficulties that required bringing some complex processes in house, and said significant catch-up is planned in the fourth fiscal quarter.

Cash, Debt and Guidance

Free cash flow was USD 85.7 million, or 91.4% of net income, compared with USD 71.7 million and 119.5% a year earlier, and conversion through six months stands at 119%. The company paid off USD 96 million of debt, including the remaining term Loan ahead of a November 2026 target. Interest expense was USD 9.3 million, down 30.6%.

For the third fiscal quarter, the company guided revenues of USD 525 million to USD 530 million, adjusted gross margin of 45.5% to 45.75% and SG&A of 16.25% to 16.5% of net sales. That implies nine-month sales of USD 1.56 billion to USD 1.57 billion, up 15.6% to 16%. Management attributed the seasonal outlook to holiday impacts, noting that customer certification releases may roll into the fourth quarter, and said the second half benefits from an extra accounting week.

Fiscal Second-Half Indicators

Management said aerospace and defense growth could exceed 15%, possibly approaching 20%, if marine output recovers, and budgets high-single-digit growth on the industrial side given its dependence on economic growth. Items to watch include marine production catch-up, the timing of customer certification releases and the pace of deleveraging. Management said capacity, machinery, Training and supply chain logistics added over several years now show up in results.