RBC Bearings Q1 2026 Earnings Report

RBC Bearings EPS Results

• Actual EPS: $2.84
• Consensus EPS: $2.74
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: $2.54

RBC Bearings Revenue Results

• Actual Revenue: $436.00 million
• Expected Revenue: $432.63 million
• Beat/Miss: Beat by +$3.37 million
• YoY Revenue Growth: +7.30%

RBC Bearings Announcement Details

• Quarter: Q1 2026
• Date: 8/1/2025
• Time: Before Market Opens
• Conference Call Date: Friday, August 1, 2025
• Conference Call Time: 11:00AM ET

RBC Bearings (NYSE:RBC) is a manufacturer of highly engineered bearings and motion-control components. The company designs and produces products used to reduce friction, support rotating or moving equipment, and manage loads in demanding operating environments. Its offerings include plain bearings, roller bearings, ball bearings, spherical bearings, rod ends, thrust bearings, and specialty bearing assemblies.

The company supplies components for aerospace and defense applications, industrial machinery, transportation equipment, construction and mining systems, medical devices, and energy-related equipment. RBC Bearings also develops customized products and specialized solutions designed to withstand high temperatures, corrosion, heavy loads, and other challenging conditions.

Founded in 1919, RBC Bearings is headquartered in Oxford, Connecticut. Its products are marketed to original equipment manufacturers and aftermarket customers through manufacturing and distribution operations serving customers in North America and international markets.

RBC Bearings Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q1 financial results with sales up 7.3% to $436 M, adjusted EPS of $2.84 (+11.8% year/year), and record free cash flow of $104.3 M.
• Positive Sentiment: Aerospace & Defense sales rose 10.4% year/year (9.6% commercial, 11.9% defense) and backlog exceeded $1 B for the first time.
• Neutral Sentiment: Industrial segment sales grew 5.5% with distribution and aftermarket up 10%, though oil & gas and semiconductor markets remain weak.
• Positive Sentiment: The recent infrastructure bill’s favorable expensing rules are expected to spur capital investment and boost industrial demand in future quarters.
• Positive Sentiment: VAACO acquisition adds marine and space business, projected to contribute $15–20 M of Q2 revenue at 25–30% gross margins, with integration synergies underway.

Presentation

[Josh Carroll, Investor Relations at RBC Bearings Incorporated]

Morning and thank you for joining us for RBC Bearings' fiscal first quarter 2026 earnings call. I'm Josh Carroll with the Investor Relations team and with me on today's call are Dr. Michael Hartnett, Chairman, President and Chief Executive Officer, Daniel Bergeron, Director, Vice President and Chief Operating Officer, and Rob Sullivan, Vice President and Chief Financial Officer. As a reminder, some of the statements made today may be forward looking and are 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 listed in the press release along with reconciliation between GAAP and non-GAAP Financial nformation.

[Josh Carroll, Investor Relations at RBC Bearings Incorporated]

With that, I'll now turn the call over to Dr. Hartnett.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Thank you, Josh, and good morning. We had a great quarter and we have some really good news to go through with you today. Thank you all for joining us. I'm going to start today's call as usual with a short review of our financial results and I'll finish our outlook on the industry and fiscal 2026. Rob Sullivan will follow me with more details on the numbers. Our first quarter sales were $436 million, a 7.3% increase over last year, driven by continued strong performance in our AeroSpace and Defense segment and solid performance from our industrial businesses. Consolidated gross margin for the quarter was 44.8% versus 45.3% for the same period last year, and adjusted diluted EPS was $2.84 versus $2.54 per share. Clearly, we're very pleased to see these strong margins and kick off our first quarter in Fiscal 2026.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Free Cash Flow was another highlight of the period at $104.3 million, setting a new record for RBC Bearings, and adjusted EPS was $2.84 per share. Total A&D Sales were up 10.4% year-over-year, with 9.6% growth on the commercial AeroSpace side and 11.9% in defense. On the industrial side, the segment grew 5.5% year-over-year, with the distribution and aftermarket up 10%. In A&D, we continue to see broad strength across the portfolio. The aircraft aftermarket expanded 22.6%, and the defense aftermarket contributed well, also yielding a total of 10.4% for the segment in the quarter. We cheer the progress Boeing is making on aircraft production and continue to pray for their continued success. Moving to industrial, we achieved a 5.5% growth this quarter. Most of our industrial markets contributed to this performance: aggregate, metals and mining, food and beverage, forest products, warehousing, grain and grain to name a few.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Oil and gas as well as semiconductor remain weak. For RBC, the industrial economy felt strong and the recent print of 3% U.S. GDP expansion confirmed our impression during the period. Certainly, the tax treatment for capacity investment in the Big Beautiful Bill recently signed portends well for these sectors in future quarters, and we expect this to be a very positive influence on demand for our products for the balance of this year and into next. Overall, our backlog for the first time exceeded $1 billion during the period, with $100 million of that being industrial products. Our relentless drive for organic growth through product innovation and market development creates new opportunities that are identified and sorted monthly at our OPS meetings. This is often where high potential productive short and long term options are identified and prioritized.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

These can be for markets as diverse as Aero Engine, Space, Guided Weapons, Marine, Warehousing, Airframe, Bridge Building, to name a few examples. This has become an increasingly important feature of our business plan, adding to meaningful revenues year in and year out. A little on defense. Demand for our products remains at unprecedented levels. We expect to see this sector of our business expand in the high single to low double digits for many quarters into the future. We are adding to our capacities where needed to satisfy the expanding requirements of our customers. Our Marine business is a primary driver in this regard, but there are many other subordinate drivers in this expansion such as Airframe, Aero Engine, and Aero Aftermarket. Clearly, the recent acquisition of VACO adds fuel to this fire. A little on VACO. VACO's marine business, which has historically represented half of their revenues.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Demand for their products, like ours, is very high. Again, driven by the build out of the U.S. Submarine fleet. Their business, like ours, must expand to meet the needs of the Navy. The synergy between RBC and VACO is strong, adding critical mass in the areas of Engineering, Manufacturing, Contract Management, and Supply Chain. We are only weeks into our ownership of this new business and I will wait until our next conference call to further elaborate on our plans and potential. I am highly optimistic about our future together with this unusually synergistic business. As we begin Q2 and Fiscal 2026, the year is shaping up to be a very strong one for RBC. We are well positioned in our markets. We see unprecedented demand in several important areas of the market for our products.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

We hold a strong balance sheet and have created a well defined business plan in most of our core businesses with a strong button down five year outlook that's executable. I will now turn the call over to Rob Sullivan.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

Thank you, Mike. As Dr. Hartnett indicated, this is another strong quarter for RBC. Net sales growth of 7.3% drove gross-profit-growth of 6.1% with gross margins of 44.8% for the quarter and 45.4% on an adjusted basis versus 45.3% for the same period last year. Our performance during the quarter was driven by a strong performance across our business segments with industrial gross margins leading the way. Industrial gross margins during the quarter were 46% and AeroSpace and Defense margins were 42.3%. On an adjusted basis, industrial gross margins were 47.1% for the quarter. On the SG&A line, we had total costs of $73.9 million or 16.9% of sales for the quarter. Included in that number were additional personnel and fringe costs as well as continued investment in IT-related costs during the quarter. This ultimately resulted in Adjusted EBITDA of $141.5 million or 32.5% for the quarter.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

That reflects a 5.6% increase in EBITDA dollars year over year. Interest Expense in the quarter was $12.2 million. This was down 29.1% year over year, reflecting the impact of the debt payments made in fiscal 2025, further enhanced by reduced interest rates this quarter as compared to this time last year. During the quarter, we only paid off approximately $6 million of debt as we held cash in anticipation of the VACO deal closing. The tax rate in our adjusted EPS calculation was 22.5%, consistent with last year's 22.4%. Altogether, this led to adjusted diluted EPS of $2.84, representing growth of 11.8% year over year, an impressive result given the choppiness in commercial AeroSpace production schedules and the macroeconomic softness in the industrial economy. Free Cash Flow in the quarter came in at $104.3 million with conversion of 152% in comparison to $88.4 million and 144% last year.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

The higher conversion rate was due to the increased earnings and working capital management during the quarter. In July, we drew down $200 million of our revolver to help finance the VACO acquisition, with the remaining $75 million payment coming from cash on hand. Looking ahead, our capital allocation strategy will remain focused on deleveraging by using the cash that we are generating to pay off that $200 million we drew by the end of the fiscal year. Looking into the second quarter, we're guiding revenues of $445 million to $455 million, representing 11.8% to 14.4%. That guidance embeds an operating environment that's been fairly similar to what we have been seeing over the last few quarters, with an additional benefit of owning VACO.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

For a little more than two months.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

On the margin side, we are projecting gross margins of 44% to 44.25% for the quarter and SG&A as a percentage of sales to be between 17% and 17.25% for the quarter. Embedded in all this is an assumption that VACO will add approximately $15 million to $20 million of revenue to our quarterly results in Q2 with gross margins between 25% and 30%. Very similar to Sargent when we closed on that acquisition. Keep in mind, this deal closed in the second half of July and therefore this does not reflect the full quarter's worth of sales activity. To wrap it up, this is another strong quarter for RBC, which underscores the momentum we have built and the strength of our strategic execution. As Dr.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

Hartnett notes, we're well positioned to achieve our objectives and drive growth driven by our core capabilities in engineering and operational excellence and innovative product development. Our focus will continue to remain on executing on our organic growth, integrating VACO, enhancing operational efficiencies and delivering robust Free Cash Flow conversion to create long-term value for all of our stakeholders. With that, operator, please open the call for Q&A.

[Operator]

Certainly. We will now be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. Once again, that's star 1 to be placed into question queue. A confirmation tone will indicate your line is in question queue. You may press star 2 if you'd like to remove your question from the queue. Our first question today is coming from Kristine Liwag from Morgan Stanley. Your line is now live.

[Kristine Liwag, Executive Director at Morgan Stanley]

Hey, good morning, everyone.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Good morning, Kristine.

[Kristine Liwag, Executive Director at Morgan Stanley]

Mike, in your prepared remarks you kind of talked about a five year outlook there. I was wondering what parts of that could you share with us? How are you thinking about the next five years and what are the key components that you're measuring?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

We're going from major business to major business and we're lining up our historical sales by account and what the outlook for those accounts are. As you know, if it's Boeing or Airbus or Embraer or Pratt & Whitney or GE or one of the other big drivers of the AeroSpace industry, they're all customers of ours and their business outlook is pretty well defined and within limits. We use that, and knowing our content and knowing what the expansion of our content would be over that term based upon some of the things that we're working on now and expect to convert, we boil that all into revenues by account and margins by account and expand it over a course of five years. We do that for basically all of our businesses, but obviously the big ones get the most attention. That leads us to the point of.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Planning.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Do we have the right capacity to satisfy the business demands for these customers? With that, we kind of look at what our capitalization is in each one of those business units and where it needs expansion, improvement. We are likely the mix is going to be the strongest and maybe our production ability to support that mix is weak. It gives us sort of a timeline to build out our thoughts on how to expand those businesses. We have several businesses that have very, very positive outlooks over the next five years given where they're positioned in their markets. I don't know if I answered all your questions, but that's our process.

[Kristine Liwag, Executive Director at Morgan Stanley]

It sounds like a pretty positive one. With the capacity that you have in place and you had built out a lot of capacity going into Covid in preparation for these new programs, does this mean that you have to spend more money on CapEx? How should we think about the margin if the build rates play out as the OEMs have described or are planning for? What does that ultimately mean for potential margin expansion and revenue growth for your AeroSpace business?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Certainly for the AeroSpace business, it's very positive. Actually right now, we're air freighting manufacturing equipment from Europe into some of the plants to expand the capacity on an accelerated business because business is a little bit stronger in certain areas than we had anticipated. I think in terms of how much CapEx we'll employ over that period of time, you know, I think we're like between our depreciation is like 3 or 3 to 4% of our revenues, and I think we're going to kind of stay in that range. We have some real estate that will probably end up liquidating and consolidating a couple of businesses over time, which sort of will net us back to that 3 to 4% kind of range.

[Kristine Liwag, Executive Director at Morgan Stanley]

Great, thank you. If I could follow up on the Big Beautiful Bill comment that you mentioned. I mean, you guys are core to U.S. Infrastructure Build. When you think about the opportunity set that's outlined in that bill, can you, with the portfolio today, give us a reminder of where you are in the cycle? Are you going to be earlier cycle on those builds, middle? How quickly, ultimately, for your business could you see orders materialize? Is that what kind of drove that $100 million backlog for industrial that you called out earlier?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

I think a lot of our industrial customers are small. Not all of them are small, but a lot of them are small. I think the tax treatment in that Bill allowing them to expense their industrial equipment and minimize their tax bill in any given year is catnip. We would expect to see a lot of expansion of demand from those smaller customers. That's probably how it's going to affect our industrial business the most. I'm not sure. On the aircraft and AeroSpace and Defense side, everybody's a pretty large customer and they probably don't pay taxes now anyway. I'm not sure how impactful that bill will be, but we're expecting it to be more favorable on the industrial side than the AeroSpace side.

[Kristine Liwag, Executive Director at Morgan Stanley]

Great, thank you very much.

[Operator]

Thank you. Our next question today is coming from Michael Ciarmoli from Truist Securities. Your line is now live.

[Michael Ciarmoli, Senior Research Analyst at Truist Securities]

Thanks for taking the question. Nice results as always. Rob, can you maybe help us with just more of the modeling details for VACO? I mean, should we be, I think we had the full year run rate revenue for March. Should we be thinking they're getting similar growth tailwinds from other naval exposed companies, so you know, maybe $10 to $11 million monthly revenue contribution to work with our models. Does all of this revenue go into the A&D segment specifically in defense? I guess just thinking about margins, it seems like if we use that midpoint of what you gave, maybe it's 150 basis points of dilution this year. Anything else you can share with.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

It's early days, right. We've really had them under our tent for about two weeks now. I think we'll have a lot more to share on where it's all going to go for the broader year by next quarter. I kind of laid out what I thought the impact is going to be for this coming quarter. I think generally speaking where our margins are running, if you look at our, despite any dilutive impact, if you look at our gross margins for Q2 and the range that we provided, it's still exhibiting year-over-year expansion from where we were at this time last year. It's not overall as meaningfully impactful as a result. Just about any acquisition we were going to put under our tent would have some measure of impact in the short term. That's our playbook.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

Right.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

That's what we've done with Sargent, that's what we've done with Dodge. That's kind of how we're looking at this thing. I think they're running at a $30 million a quarter run rate on sales over the last 12 months, and that's kind of the barometer that we were using, so more to come certainly in the future.

[Michael Ciarmoli, Senior Research Analyst at Truist Securities]

Okay, that's helpful. Yeah, I was saying 150 basis points dilution. I was actually looking at my 2026 exit rate. Yeah, you should still get year-over-year expansion. Are we putting all these revenues in the A&D sector or is anything going into industrial just so we could have.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

Yeah, no, it's models Calibrated A&D.

[Michael Ciarmoli, Senior Research Analyst at Truist Securities]

Okay, okay, helpful. Maybe separately, Mike, what do you see in commercial AeroSpace? We've seen some differing trends, maybe some destocking on the airframe side. Engine continues to be strong. I think your year-over-year growth, I think if I've got it right in the OE side, maybe showed some deceleration with a big pickup in aftermarket. Anything else you can talk to, build rates, color order, trends?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

I think the build rates are, you know, pretty public news, right, and our content per build rate is pretty well defined. We do expect to in a measured way expand our content on some of these ships over the next six to 12 months. I think that's probably the biggest positive we're seeing right now. Currently, we're negotiating contracts with all of these OEMs on expanding our statement of work and the term of the statement of work over the next five years. The discussions are very positive. I think it's looking good for us.

[Michael Ciarmoli, Senior Research Analyst at Truist Securities]

Okay, thanks. I'll jump back in the queue. Thanks, guys. Thanks.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Thank you.

[Operator]

Next question is coming from Steve Barger from KeyBanc Capital Markets. Your line is now live.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Hey thanks.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Good morning.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Morning, Steve.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Mike, you talked about some of the impacts from the one Big Beautiful Bill on smaller customers. We've been hearing a few industrial companies talk a little more positively about the back half and even 2026 before seeing that benefit. To the extent you can pull stimulus apart from general demand, does it feel like we've turned the corner into a sustainable industrial expansion?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

It certainly felt that way in the first quarter. I mean, our industrial distribution business in the first quarter was up 10%. That's pretty good for an Industrial Distribution business to be up 10% in the quarter. Our metrics are telling us that yes, things are getting stronger. My own metric is the number of tractor trailers on the highways that are between me and my exit seem to be exponentially larger this year than they were last year. Everybody that comes to work complains about the traffic now. To me that's a very good sign that the economy is really being stimulated.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Yeah, makes sense. Great to see you hit the $1 billion backlog milestone. You said most of that is aero and defense. What's the duration of that backlog? Is that multiple years?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

It is multiple years. We think we have an honest to goodness chance of doubling that over the next 12 months.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Wow.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Just from all the defense programs primarily, or does that include commercial? What would drive that?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Mainly defense.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Got it.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Okay. When you talk about doubling that over the next 12 months, would that push the backlog to end of decade, or how would we think about the monetization schedule of that?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

A lot of the center of mass on that is our build outs of equipment between now and 2030, 2031, 2032. That's sort of how these contracts are coming together.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Got it.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

Last one for me, you know, we know you and your team make detailed plans. Just like how you talked about the five-year process. I know it's really early in owning VACO, but just you talk about first steps of integration. Can you take a shot at margin progression in coming quarters and years and how you see that playing out just based on your experience, other deals?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Yeah, you know, on Sargent.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

You.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

VACO is kind of Sargent's little brother for half of their revenues, particularly the marine half. It's RBC's AeroSpace little brother for the other half, for the Space half. We have it well covered. When we did Sargent, we expanded over time their margins by about 1,000 basis points. I'm not sure exactly what the historical time frame was that we did that, but it was probably between when we acquired Sargent in 2015 and when the wheels came off with the pandemic, early 2020. It was probably in that period of time that we expanded it. I don't think VACO is going to take that long and I think they're going to see a similar ramp. We're thinking 18 to 24 months would be a good bogey. Nothing is hard, nothing is unknown. As Rumsfeld says, it's all known knowns to us and it's a matter of execution.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

We literally have teams of people on the West Coast there every day sorting through and creating a roadmap. VACO is in a geographic area where we have an employment base of over 1,000 people and seven or eight plants, and it's very highly synergistic to what they do and how they do it, what skill sets they have, and what they have for supply chain and what we have for supply chain. They're very, very similar businesses. I think it's going to be much easier to accelerate the improvement of that business than it was for Sargent and maybe not as easy as Dodge.

[Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets]

That's great detail. Looking forward to seeing how that progresses. Drive safe out there.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Yeah, thanks.

[Operator]

Thank you.

[Operator]

Next question is coming from Scott Deuschle from Deutsche Bank. Your line is now live.

[Scott Deuschle, Equity Research Analyst at Deutsche Bank]

Hey, good morning. Dr. Hartnett, does the upgrade of the GTF Engine to the GTF Advantage create an opportunity for RBC to potentially increase its share position on the program? Meaning just the changes in the engineering of the engine and the upgrades for certain parts create some openings for you all to come in and increase your content?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Yes, yes, yes, and yes, we're going to increase our content.

[Scott Deuschle, Equity Research Analyst at Deutsche Bank]

Any more specifics?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

I hesitate to talk more about it, but it's, we're going to increase our content substantially on that engine.

[Scott Deuschle, Equity Research Analyst at Deutsche Bank]

Okay, do you have a sense for when that begins to ramp up for you all? Do you see a little bit in the second half of this year and more 2026 in terms of when we see those gains?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

I think it's going to start slowly in calendar 2026 and ramp through 2030.

[Scott Deuschle, Equity Research Analyst at Deutsche Bank]

Okay. Dr. Hartnett, it sounds like we'll hear more on VACO in the future, but can you maybe just spend a few moments with respect to the revenue synergy strategy with VACO, particularly as it relates to Space.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Yeah, I mean, I think the Space business is probably the hardest part for us to sort through. RBC Bearings has a pretty good business in Space with a completely different customer base than VACO has, with completely different products than VACO has. VACO has a really nice core Space business and then some business in Space that needs to be rethought. We're sort of working our way through that. Net net, some of the VACO customers have always been target customers for RBC Bearings on the Space side. We're going to have good introductions there. We'll be able to ride VACO's coattails into those customers. On the other hand, VACO can ride RBC Bearings' coattails into customers in the Space business that they don't have. I think that's what we see as the benefit right now.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

I think VACO's engineering strength in what they do and what they produce for products is, if not unique, very, very limited design engineering test skills available at that level in the country. They really have some very unique talents and tools which we hope to be able to employ going forward in RBC's Space business benefit.

[Scott Deuschle, Equity Research Analyst at Deutsche Bank]

That's great. Last question, if I can just. On the AeroSpace and Defense ramp, do you foresee any supply chain constraints on your end over the next few years, particularly as it relates to your ability to obtain sufficient volumes of specialty alloys, or do you already have firm delivery commitment growth lined up with suppliers of those alloys?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

That's kind of a, I think on the supply chain side, non-alloy, I think we're fine.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

You.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Where VACO is on the supply chain side is something that we're trying to sort through. We have so much production capacity ourselves in LA that I don't think it's going to be a big issue. We're very vertically integrated from the, you know, once we receive the material. Now, receive the material, that's another issue. There are some materials that are not a problem and that are, you know, semi exotic. They're stainless steels and we use them in, you know, pretty, pretty good quantities and they're a little bit on the commodity side in terms of the ability to, you know, procure these. That's all fine. On some of the more exotics, you.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Know.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

We've been tested for years on how to secure and procure some of these exotic materials and have actually bought extensive inventories of the exotics to protect our production base. Those at one point in time were impossible to get, and that seems to have improved and it's more normalized. Nevertheless, it's still, you can't get some of this stuff for 60 weeks. Your planning cycle needs to be way out there in order to make sure that your customer deliveries don't get affected by somebody that can't get your material. That's a little bit of a challenge, but it's on an 80/20 basis. It's definitely in the 20 category, not the 80 category.

[Scott Deuschle, Equity Research Analyst at Deutsche Bank]

Thank you very much, and great results.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Thank you.

[Operator]

Thank you. Next question is coming from Pete Skibitski from Alembic Global. Your line is now live.

[Pete Skibitski, Director, Aerospace and Defense Equity Research Analyst at Alembic Global]

Yeah, thanks guys. Nice quarter, Mike. I want to circle back to industrial one more time. PMIs have stayed below 50, but revenue has really kind of accelerated here the last couple of quarters. You mentioned GDP and the tax changes. We're a month here into the second quarter. Do you have some degree of confidence that industrial is now kind of a mid single digit grower versus maybe more tepid growth if we, the way we're thinking about it six months ago?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

I.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

think it's sector dependent. You know, you look at certain sectors and it's off. Our major sectors have performed very well up year to year. I guess if I'm in Texas, I'm not feeling great about life in the oil patch. On the other hand, if I'm doing grain or aggregate in various parts of the country, I'm doing fine. Forest products seem to be doing great. Food and beverage seem to be doing great. The consumable side of the world is okay. The larger OEM side of the world is definitely slow. We haven't seen the turn into larger OEMs. On the consumable side it's definitely turned.

[Pete Skibitski, Director, Aerospace and Defense Equity Research Analyst at Alembic Global]

Okay, maybe we shouldn't get too carried away with our assumptions there yet?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

I think the impact of this bill is yet to be seen. It's only weeks old, right, and I think that's going to have a real positive effect. Will farmers buy more combines because they can expense them in a given year? Some might. It might help people like Deere.

[Pete Skibitski, Director, Aerospace and Defense Equity Research Analyst at Alembic Global]

Okay, fair enough. Just last one for me, in the first quarter and maybe, you know, quarter to date and second quarter, have you seen any impacts at all, positive or negative from tariffs?

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

You know, tariffs? First of all, we're very U.S.A. oriented and U.S.A. organized, and our production and sales is mainly influenced by what happens in the country. We are impacted by tariffs. To the extent that we needed to, we've sort of neutralized the impact of our tariff exposure to our P&L with price adjustments or adjustments in our contracts, supply agreements. We have some customers who say, okay, you know, we understand there's a tariff that's on us, we're the importer of record and just pass it through. We're happy to do that. Others are more argumentative about it, and we try to work with them as cooperatively as possible. How that's going to turn out remains to be seen. Others, we've just adjusted the price.

[Pete Skibitski, Director, Aerospace and Defense Equity Research Analyst at Alembic Global]

Yeah. Fair enough. Thanks for the color.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Okay.

[Operator]

Thank you.

[Operator]

Next question is coming from Jordan Lyonnais from Bank of America. Your line is now live.

[Jordan Lyonnais, VP and Equity Analyst at Bank of America]

Hey, good morning on Arrow. Just given that it looks like production is stabilizing, how should we think about contract renewals that you guys have coming up in pricing power going forward?

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

I think we've developed a.

[Rob Sullivan, VP and CFO at RBC Bearings Incorporated]

Really strong reputation with our customers, and it was really done through execution. That starts with quality, starts with our on-time delivery. We're thrilled with what the news has demonstrated or illustrated in terms of the production rates and the stabilization in some of the large OEMs. I think it's more just the reputation that we've earned through our performance over the years that gives us the ability to successfully develop the long-term agreements that we've been able to do in the past and the ones we're looking forward to in the future in 2026.

[Jordan Lyonnais, VP and Equity Analyst at Bank of America]

Got it.

[Pete Skibitski, Director, Aerospace and Defense Equity Research Analyst at Alembic Global]

Thank you.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Thank you.

[Operator]

We've reached the end of our question and answer session. I'd like to turn the floor back over to Dr. Michael Hartnett for any further closing comments.

[Michael Hartnett, Chairman, President and CEO at RBC Bearings Incorporated]

Okay, I think that concludes our conference call for the day. I appreciate everybody's questions and participation and look forward to talking to you again. I guess it's mid fall, so good day. Thank you.

[Operator]

That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Participants

Executives

• Josh Carroll, Investor Relations
• Rob Sullivan, VP and CFO
• Michael Hartnett, Chairman, President and CEO

Analysts

• Kristine Liwag, Executive Director at Morgan Stanley
• Pete Skibitski, Director, Aerospace and Defense Equity Research Analyst at Alembic Global
• Scott Deuschle, Equity Research Analyst at Deutsche Bank
• Michael Ciarmoli, Senior Research Analyst at Truist Securities
• Steve Barger, Managing Director and Senior Equity Analyst at KeyBanc Capital Markets
• Jordan Lyonnais, VP and Equity Analyst at Bank of America