RBC Bearings Q1 2027 Earnings Report

RBC Bearings EPS Results

• Actual EPS: $3.88
• Consensus EPS: $3.42
• Beat/Miss: Beat by +$0.46
• One Year Ago EPS: $2.84

RBC Bearings Revenue Results

• Actual Revenue: $519.50 million
• Expected Revenue: $508.92 million
• Beat/Miss: Beat by +$10.58 million
• YoY Revenue Growth: +19.20%

RBC Bearings Announcement Details

• Quarter: Q1 2027
• Date: 7/31/2026
• Time: Before Market Opens
• Conference Call Date: Friday, July 31, 2026
• Conference Call Time: 11:00AM ET

RBC Bearings (NYSE:RBC) is a global designer, manufacturer and marketer of highly engineered precision bearings and components for extreme applications. The company’s product portfolio includes cylindrical roller bearings, spherical plain bearings, ball bearings, track rollers, and engineered components such as metal-to-metal and polymer bearings. These products are tailored to meet the demanding requirements of aerospace, defense and industrial customers where reliability under severe conditions is critical.

The company’s bearings and components find application in aircraft engines, auxiliary power units, landing gear systems, space and missile programs, industrial gas turbines, oil and gas drilling equipment, and heavy machinery. RBC Bearings supports its global customer base through a network of manufacturing facilities, service centers and distribution partners in North America, Europe and the Asia-Pacific region, ensuring localized engineering support and responsive after-sales service.

Headquartered in Oxford, Connecticut, RBC Bearings traces its origins to the founding of the Roller Bearing Company in 1919. Over the decades, the business has expanded both organically and through strategic acquisitions to broaden its product lines and international reach. The company is led by President and Chief Executive Officer Christopher J. Schemanske, who has steered its focus on innovation, operational excellence and customer collaboration.

RBC Bearings Q1 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: RBC Bearings reported a strong fiscal first quarter, with sales up 19.2% year over year to $519.5 million, adjusted EPS up 36.6% to $3.88, and adjusted EBITDA up 28.1% to $181.2 million.
• Positive Sentiment: Aerospace and defense sales increased 36.9%, including strong commercial aerospace and defense growth, while the space business generated $25 million in first-quarter revenue and now serves more than a dozen customers.
• Positive Sentiment: Industrial demand remained broad-based, with OEM revenue up 21.5% and growth across aggregate and cement, food and beverage, warehousing, semiconductors, and grain markets; management said the trend continued into July.
• Positive Sentiment: Strong free cash flow of $146.9 million enabled $77 million of debt repayment during the quarter, followed by another $50 million afterward; the company remains on track to repay its remaining term loan by November 2026.
• Negative Sentiment: Second-quarter guidance calls for lower adjusted gross margins of 45.5%–45.75%, partly reflecting the absence of approximately 100 basis points from one-time tariff refunds, contract-related benefits, and normal seasonal effects. Marine shipments were also constrained by supply-chain issues, although management expects significant improvement in the second half of the fiscal year.

Presentation

[Josh Carroll, Investor Relations Team Member at RBC Bearings]

Good morning, thank you for joining us for RBC Bearings' fiscal first quarter 2027 earnings call. I'm Josh Carroll with the Investor Relations team. With me on today's call are Dr. 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 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 a reconciliation between GAAP and non-GAAP financial information.

[Josh Carroll, Investor Relations Team Member at RBC Bearings]

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

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

Thank you, Josh. Good morning, thank you for joining us. I'll begin today's call with a brief review of our first quarter results and discuss the trends we are seeing across the end markets before turning the call over to Rob, who will provide additional details on our financial performance. We delivered a strong start to fiscal 2027, with first quarter net sales increasing 19.2% year-over-year to $519.5 million. This was driven by exceptional demand in our Aerospace & Defense business, followed by strong growth across our Industrial segment. Consolidated and adjusted gross margins for the quarter were 47.7%. Adjusted EPS increased 36.6% year-over-year to $3.88, compared to $2.84 in the prior year's period. Adjusted EBITDA rose 28.1% to $181.2 million, up from $141.5 million last year.

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

Free cash flow remained a strong $146.9 million, and we eliminated $77 million of debt during the first quarter. Turning now to our two business segments. Approximately 57% of our revenue during the quarter came from the Industrial segment. The remaining 43% came from our A&D business. A&D has continued to perform exceptionally well, with segment revenue increasing 36.9% compared to the prior year period, 16.6% of which was organic. I'll dive now a little bit into our two business segments, starting with Aerospace & Defense. Commercial Aerospace growth was 21.8%, 20.3% on an organic basis. Defense was up 64.6%, and 10% organically. Across the A&D business, we are observing healthy order activity, increasing RFQ volumes, contract inkings, and daily customer requests for additional capacity. We continue to expand production rates for commercial aircraft and engines at several production sites in North America and Europe.

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

As you know, our products are deeply embedded across the A&D markets. We see a very healthy demand outlook. Our space sector, we see an impressive and building momentum. As you may recall from our last earnings call, our space business generated approximately $70 million of revenue during fiscal 2026. In the first quarter alone, our space business contributed $25 million to revenue, putting it on a strong run rate for fiscal 2027. We now serve more than a dozen space customers. Robust investments by our major customers across both commercial and government space markets abound. We believe this business is still in the early stages of becoming a significant and long-term growth opportunity for RBC. Shifting gears now to marine. Our marine business demands production growth and a lot of it. Our backlogs now stands at $2.3 billion, much of which is marine.

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

Given the complexity of these designs, production can be challenging at times with knots in the supply chain that can appear. We have untied most of those knots and are planning to expand shipments from this sector significantly in the second half of our year. We think most of those problems are now behind us. Turning now to our Industrial business. Performance remained strong during the period, with OEM revenue increasing 21.5% and distribution revenue growing 3.1%. During the quarter, we saw growth across sectors of aggregate and cement, food and beverage, warehousing, semiconductors, and grain industries. Only a small number of our end markets in Industrial showed a very modest decline during the period, reinforcing our view that industrial environment remains healthy and poised for continued growth.

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

Overall, we are excited and energized by the strength and outlook of our core business sectors. Our priorities remain focused, execute efficiently, support our customers, and invest in the capacity and capabilities needed to meet the growing multi-industry demands for RBC products. We believe our differentiators make the difference. These are outstanding service levels, strong brands, leading market positions, technical expertise, and most of all, our employees. People who work every day to make RBC the very best we can be and provide the foundation needed to serve well all stakeholders. With that, I'll turn the call over to Rob.

[Rob Sullivan, VP and CFO at RBC Bearings]

Thank you, Mike. We started off fiscal 2027 with a strong first quarter that exceeded our expectations, with net sales growing 19.2%, which led to a 26.9% increase in our reported gross margin. Gross margins were 47.7% for the quarter, compared to 45.4% on an adjusted basis for the same period last year. The gross margins this quarter reflect the benefits of increased volumes running through our production facilities, driving operating efficiencies, favorable mix, and the benefit of contract resolutions realized during the quarter. Further, the timing of tariff refunds, which temporarily alleviated the impact of ongoing global tariff costs, provided almost 100 basis points of benefit to gross margins this quarter. First quarter A&D sales increased 36.9% year-over-year. With the VACCO acquisition excluded, our A&D business saw an increase in sales of 16.6%, which highlights the continued strong growth of both our legacy commercial and defense markets.

[Rob Sullivan, VP and CFO at RBC Bearings]

Net sales from our Industrial business increased 8.4% during the period. A&D gross margins during the quarter were 44.5%, and Industrial margins were 50.2%. We are pleased with the expanded gross margin in both segments, with A&D margins expanding more than 180 basis points year-over-year and Industrial adjusted gross margins expanding more than 300 basis points year-over-year. On the SG&A line, we had total costs of $85.8 million, or 16.5% of net sales for the quarter. This ultimately resulted in an adjusted EBITDA of $181.2 million or 34.9% of sales for the quarter. That represents an approximate 28% increase in adjusted EBITDA dollars during the quarter compared to the same period last year. Interest expense for the quarter was $10.1 million.

[Rob Sullivan, VP and CFO at RBC Bearings]

This was down 17.2% year-over-year, reflecting the improved leverage position achieved over the last 12 months, coupled with lower interest rates compared to this time last year. We paid off $77 million of debt during the quarter and another $50 million on the term loan since the end of the quarter. The tax rate in our adjusted EPS calculation was 22% compared to last year's 22.5%. This led to an adjusted diluted earnings per share of $3.88, representing growth of 36.6% year-over-year. Free cash flow in the quarter came in at $146.9 million, with conversion of 144.7% of net income compared to $104.3 million and 152.3% last year.

[Rob Sullivan, VP and CFO at RBC Bearings]

Our capital allocation strategy continues to remain focused on deleveraging by using the cash that we generate to pay off our outstanding debt, and we continue to remain on track to pay off the remainder of the term loan by November of 2026. Looking into the second quarter of fiscal 2027, we are guiding revenues of $505 million-$515 million, representing year-over-year growth of 10.9%-13.1%. On a six-month basis, that would mean sales are expected to be $1.024 billion-$1.035 billion, representing growth of 14.9%-16.1% year-over-year. Adjusted gross margins in the next quarter are expected to be in the range of 45.5%-45.75%, and SG&A as a percentage of net sales is expected to be in the range of 16.5%-16.75%. With that, operator, please open the call for Q&A.

[Operator]

Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, 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 you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull up our questions. Thank you. Our first question is from Kristine Liwag with Morgan Stanley.

[Kristine Liwag, Analyst at Morgan Stanley]

Hello, good morning, everyone.

[Rob Sullivan, VP and CFO at RBC Bearings]

Morning, Kristine.

[Kristine Liwag, Analyst at Morgan Stanley]

Mike, you've historically said that gross margin is just math and you're really good at math, so you're never surprised by gross margins in any given quarter. I just want to check a little bit. 1Q fiscal year 2027 was robust, 47.7% out of the gate. When we look at your 2Q outlook, you're at 45.5%-45.75% for the quarter. I was wondering, were there any one-time items in 1Q that had the higher margin? Is there mix or any one-time items? When we look at 2Q, how conservative is that outlook, and how do we think about this through the rest of the year?

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

Okay. I'm just making some notes on your questions. I think in terms of the gross margin one-time items, I think Rob is probably the best prepared to talk about that.

[Rob Sullivan, VP and CFO at RBC Bearings]

Yeah. Kristine, there was really just a couple things. There was the tariff relief, the refunds, which are really one time in nature, which offered about 100 basis points of expansion. That would take the gross margins from 47.7% down to the upper 46s%. We did have some specific contract resolutions during the quarter, which offered some incremental margin benefit this quarter, which also probably added 50 or 60 basis points. From there, it's just important to remember that Q4 and Q1 tend to be our strongest margin quarters historically. With the seasonality and the fewer production days, there's just that other decrement that we were looking at when we were building out our forecast for the second quarter.

[Kristine Liwag, Analyst at Morgan Stanley]

Great. Super helpful. Maybe pivoting to more of the margin profile. I guess, it's been several quarters now, almost two years, where Industrial margins have been higher than Aerospace & Defense. I was wondering, I think this year you've got a lot of initial long-term contracts that expired, that were signed post-COVID world, and you're getting some pricing in Aerospace. As we look at the next few years, how do we think about the dynamic between margins in Industrial versus Aerospace & Defense? Will Aerospace & Defense catch up? Do you anticipate other things that could potentially get Industrial margins to come down? Like any dynamics between the two, or should we think about this in the long run where both end markets could see margins north of 50%?

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

Well, there's a lot of question in there, Kristine.

[Kristine Liwag, Analyst at Morgan Stanley]

I was hoping-

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

Yeah.

[Kristine Liwag, Analyst at Morgan Stanley]

You'll answer some of them.

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

Well, I think overall, yes. Margins will continue to expand in the A&D sector, whether they completely converge on the Industrial margins remains to be seen. They are definitely catching up. Sort of the things that are driving the margin expansion is obviously new contracts that reflect the adjustments made for inflation that occurred in the last five years that sort of depressed the value of the old contracts. Those adjustments have been made, but there's other contracts that are flowing in after the turn of the year that can sort of continue that momentum. I think the other thing is over the past several years, we've done a number of insourcing operations for bottleneck processes that created difficulty for us to finish our product. A lot of those bottleneck processes have been insourced.

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

We're seeing greater absorption through our plants and obviously, material savings also as we insource those processes. That also accrues to the margin. I think from where we finished FY 2026 to where we'll finish FY 2027, there's a good consolidated point and a half there.

[Kristine Liwag, Analyst at Morgan Stanley]

Great. Super helpful. On your prepared remarks, Mike, you called out space. It seems like you've got a strong run rate for revenue in space. You're now with 12 different customers. Can you provide more color about your exposure? Are you more exposed to the traditional space guys, like, the government space exquisite capabilities? Are you more present now with more of the commercial space companies? Would you call anything out about either their growth trajectory or where you live in that ecosystem?

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

Well, there's really a lot going on in space right now. Certainly, we have a good customer in SpaceX. As their volumes increase, our volumes increase. That's almost dialed in. We have long-term agreements with those companies. As Blue Origin solves their problems and starts to move into the commercial world in a planned way. We're very involved with the Blue Origin side of the business. We see a lot of benefit in working with Amazon right now on various projects. Those sort of are top of the list for us. On the other hand, on the government side, there's just a lot going through in terms of new space programs for the government that are keeping us busy in terms of proposals and bids and planning to support those programs, which are large programs.

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

We don't see any deficiency in demand coming from that whole space sector. As a matter of fact, I think it's going to be capacity demanding on us to support it.

[Kristine Liwag, Analyst at Morgan Stanley]

Great. Thank you, Mike. Thanks, Rob.

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

Sure.

[Operator]

Our next question is from Steve Barger with KeyBanc Capital Markets.

[Steve Barger, Analyst at KeyBanc Capital Markets]

Hey, good morning, guys.

[Rob Sullivan, VP and CFO at RBC Bearings]

Hey, Steve.

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

Good morning, Steve.

[Steve Barger, Analyst at KeyBanc Capital Markets]

Mike, backlog was flat sequentially for the first time in a while, which was kind of surprising to me. I would think some missile rearmament programs would be coming in. We know that the marine programs are really strong. You just talked about space. Can you just talk a little bit about what's going on with backlog?

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

Yeah. I think a lot of our long-term contracts, particularly on the airframe and engine side of the business, are not reflected in our backlog. It just isn't. You would see small increases in the backlog as 12 months of demand rolls in and rolls out. That would be the only adjustment there. There's some really large programs that are inbound where we're 100% certain that we will be the supplier because we're sole source on these programs, which will probably create a material change to that backlog. Also, I think the release of the seventh lot of Virginias will be a significant event for us, but I don't think that's going to happen for another 12-18 months.

[Steve Barger, Analyst at KeyBanc Capital Markets]

Got it. Your visibility exceeds the book, the backlog you report in a big way.

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

In a big way. Yes.

[Steve Barger, Analyst at KeyBanc Capital Markets]

Got it. That's great to hear. The PR said the vast majority of your end markets are growing. You said a couple were running down year-over-year. What isn't growing? Just more broadly, is the industrial cycle continuing to broaden out into something that feels more durable for the next year or two?

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

Yeah. The only sector that wasn't growing for us was metals, and that was flat. We couldn't call it growing, it was flat. It was flat over the period year-to-year. Virtually every Industrial sector other than that was up for us. Some of them, the ones that I mentioned, were up double digits.

[Steve Barger, Analyst at KeyBanc Capital Markets]

That has continued in July, and you feel like this has some legs to it from an Industrial sector standpoint?

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

Yeah. It's continued right through July. Yeah, absolutely.

[Steve Barger, Analyst at KeyBanc Capital Markets]

All right. That's great. Thank you.

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

Yep.

[Operator]

Our next question is from Scott Deuschle with Deutsche Bank.

[Scott Deuschle, Analyst at Deutsche Bank]

Hi, good morning. Rob, can you share how the tariff refund benefit split between Industrial and A&D? Was it primarily A&D?

[Rob Sullivan, VP and CFO at RBC Bearings]

No, actually, it was primarily Industrial. The majority of it went through Industrial.

[Scott Deuschle, Analyst at Deutsche Bank]

Okay. Got it. Dr. Hartnett, is there any impact to the space growth outlook from the launch pad explosion that Blue Origin had recently, or is their demand signal to you relatively unchanged?

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

No, it's unchanged.

[Scott Deuschle, Analyst at Deutsche Bank]

Okay. Then are your commercial aerospace competitors getting any better at meeting demand, or is their performance still creating big opportunities for RBC to gain share?

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

Well, I hate to disparage my competition, but we see a lot of customers that are having difficulty getting product in the market today that we don't normally see. Let's leave it there.

[Scott Deuschle, Analyst at Deutsche Bank]

Okay. Just on that, I spoke with one of your customers recently, they said RBC is great, but they're not aggressive enough about taking market share from some of these suppliers that can't perform. I know you guys have this policy to not bail out your competitors, but I guess, is there any maybe change in heart there to become a little bit more aggressive?

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

Yeah. Right now, it's very easy for us to overbook our plants, which will create a problem for the plants because we're booking more capacity than we have. If we do that, then we're going to have the same kind of service levels that the rest of the industry has. We have very good customers that give us long-term contractual obligations. Three years, five years. Sometimes, some of them ask for 10 years. Our priority is to take care of them first. If we see somebody else that comes in that we haven't seen for a long time and has an immediate need, is unwilling to make a long-term commitment, then if we can supply him without hurting somebody else, we probably will.

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

If we can't supply him without hurting somebody else, we're not going to hurt the customers that support our business in the long term. That's probably what they're seeing. I would say that everybody today that's working on the RBC side are seeing significant more demand than they have capacity. That's an environment that few have experience in, and it's easy to make mistakes.

[Scott Deuschle, Analyst at Deutsche Bank]

Very helpful. Thank you.

[Operator]

Our next question is from Pete Skibitski with Alembic Global.

[Pete Skibitski, Analyst at Alembic Global]

Good morning, guys.

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

Good morning, Pete.

[Pete Skibitski, Analyst at Alembic Global]

Hey, Rob, maybe just to clarify one thing on the gross margin benefit that you spoke to from the contract resolution and the tariffs. Did those two items impact revenue at all or just gross margin?

[Rob Sullivan, VP and CFO at RBC Bearings]

The tariff would be just in the margins. It would just be a cost offset. The contract resolution would have led to additional revenues, as well as margin benefit.

[Pete Skibitski, Analyst at Alembic Global]

Okay. What segment was that in?

[Rob Sullivan, VP and CFO at RBC Bearings]

That was in A&D.

[Pete Skibitski, Analyst at Alembic Global]

Okay. Gotcha. Okay. Yeah, just maybe to follow up. I forgot who asked it, but just on the Industrial tailwinds, it was a really nice quarter, this revenue quarter in Industrial. It wasn't a particularly easy comp, I didn't think. I think you've got easier comps in the third quarter and fourth quarter, but I know there's seasonality there. Just kind of trying to back into the Industrial outlook from your guide. Are you expecting continued kind of upper single-digit type growth at Industrial the next couple of quarters on the easier comps, or will seasonality kind of weigh on that?

[Rob Sullivan, VP and CFO at RBC Bearings]

Yeah, I think that's certainly baked into the range that we put out there for the next quarter.

[Pete Skibitski, Analyst at Alembic Global]

Okay. Maybe just one last one for me, for whoever. Guys, VACCO seems like it's coming in maybe better than expected, just in terms of the growth. I think this is the highest revenue quarter you've had with VACCO. Maybe you could tell us how far along you are with just net assessment there on VACCO, and maybe which side of the shop is growing faster, the marine side or the space side for VACCO. Thanks.

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

Yeah, sure. Well, yeah, I think VACCO had a good quarter. There's strong demand on both sides of that street for VACCO. That's great news. I think in terms of balance, longer term, I think they're going to be about equal in terms of revenue production, and probably margin production will see more benefit from the space side. That's just the way it seems to be shaping up. The space side of the business is definitely a unexpected benefit of the acquisition.

[Pete Skibitski, Analyst at Alembic Global]

Yeah. That's great. Thanks, guys.

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

Thanks.

[Operator]

As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question is from Ronald Epstein with Bank of America.

[Ronald Epstein, Analyst at Bank of America]

Yeah, hey. Good morning, guys.

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

Good morning.

[Rob Sullivan, VP and CFO at RBC Bearings]

Good morning.

[Ronald Epstein, Analyst at Bank of America]

With the demand you're seeing across the business, retaining labor, attracting new labor, how's that going? How's the enrollment in your internal training programs, and so on and so forth?

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

Yeah. Well, that's a big question, too, Ron. Well, certainly on the labor side, depending upon where you are in the country, it can be challenging, or it can be easy. I think the benefit that we have is that we have over 1,000 people in our Mexican facilities, and we don't have a labor shortage in Mexico. That's certainly a big aid to the U.S. plants in terms of capacity ramp, whenever we have to ramp into any of these sectors, and we are ramping now In the U.S., on the labor side, it's more difficult in the Northeast. Depending upon where you are in Los Angeles, it could be difficult or it could be not so difficult. If you're in Los Angeles County, it's easier. If you're in Orange County, it's more difficult.

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

In terms of our training program, at any given time of the year, we probably have, in training, probably close to 100 people with engineering or general business degrees, either training on manufacturing engineering or design engineering or applications engineering or business management practices, or sales practices. Yeah, I'd say at any given time, it's pretty easy to find 100 people going through that process.

[Ronald Epstein, Analyst at Bank of America]

Got you. On balance across the business, you're able to find enough talent to get done what you need to get done?

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

Yes. Thankfully, we've had this training program going now for, I don't know, maybe 15, 20 years. It hasn't been the scale that it is today, but it ramped up to that scale sort of linearly over that time period. Maybe 20 years ago, we had 50 people going through the system. Now we have 100 people going through. We have a really deep base of talent in many places, and they're the core to our ability to execute.

[Ronald Epstein, Analyst at Bank of America]

Got you. In your remarks, you talked a little bit about some knots. You had a knot in the supply chain. Are there any knots left out there that you worry about, or are there any knots that were kind of double knots or trickier to untie?

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

Yeah, there is some double knot. We definitely had some double knots. Particularly, the supply chain is, well, it's fragile. When the parts are complex and one of your suppliers goes out of business because they got old and didn't want to do it anymore, and had certain amount of expertise in those particular processes, recovering it can be difficult, particularly when it's a metallurgical puzzle, as some of these are. I think to the best of our ability, I think we've identified most of the double knots. I'm sure there's still a few knots out there, but we can't see where they are right now. I'm sure we'll find them, and we'll deal with them. That's just part of the supply chain.

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

I think in Los Angeles, of course, the suppliers are all really busy because it's all A&D and space and there's plenty of business around. It's a challenging world, but we survive.

[Ronald Epstein, Analyst at Bank of America]

Maybe just one last one, and this is a much broader question. Kind of in your history out in L.A., have you seen a real rebirth in Southern California with regard to A&D, particularly because of all the space stuff that's going on?

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

There must have been. There's just a lot of shops around that have really unique capabilities, I think one of the big advantages in working in L.A. is that there's so many engineering schools that generate so many talented individuals that really come into our plants in a shorter period of time, are really productive for us. The University of California school system is spectacular. Of course, with VACCO nuzzling up to JPL, that neighborhood's not too bad either.

[Ronald Epstein, Analyst at Bank of America]

Yeah. Perfect. Well, thank you very much, guys.

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

Yeah, thanks.

[Operator]

Our next question is from Alexandra Mandery with Truist Securities.

[Alexandra Mandery, Analyst at Truist Securities]

Hey, nice results, and thanks for taking my question. I just had a quick one here. Are you seeing any headwinds as a result of the Middle East and higher jet fuel environment?

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

We are not. We are not seeing any headwinds. We're hearing from some of our customers that there may be headwinds in the aftermarket, but we're not seeing it, and we're not feeling it.

[Alexandra Mandery, Analyst at Truist Securities]

Great. I guess just to add another one. I guess what is your appetite for expanding your business through M&A to take advantage of recent growth and products such as missiles and the space industry?

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

Well, we're not adverse to M&A, as you can see from our history. We like to do things that complement what we do already and help us service our customer base that depends on us to supply certain things that nobody else can supply. When acquisitions come up that sort of fit that category, we can become aggressive. Right now, in the acquisition world, you have to be aggressive.

[Alexandra Mandery, Analyst at Truist Securities]

Great. Thank you.

[Operator]

Thank you. There are no further questions at this time. I would like to hand the floor back over to Dr. Hartnett for any closing remarks.

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

Okay. Well, I thank everybody for their interest in RBC today and participating in the call, and we'll speak again in October.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.

Participants

Executives

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

Analysts

• Kristine Liwag, Analyst at Morgan Stanley
• Steve Barger, Analyst at KeyBanc Capital Markets
• Scott Deuschle, Analyst at Deutsche Bank
• Pete Skibitski, Analyst at Alembic Global
• Ronald Epstein, Analyst at Bank of America
• Alexandra Mandery, Analyst at Truist Securities