RBC Bearings’ first quarter saw a positive market response despite missing Wall Street’s revenue target, as strong demand in both its aerospace and industrial segments drove year-on-year sales growth. Management attributed the performance to robust gains in commercial aerospace, defense, and a notable turnaround in industrial operations, particularly through targeted service level improvements and new product introductions. CEO Michael Hartnett credited the breadth of RBC’s portfolio, as well as organic growth initiatives with key customers, for helping the company outperform broader industrial trends and expand gross margins. He also noted, “Our outgrowth relative to peers and the broader industrial economy has been notable.”
Is now the time to buy RBC? Find out in our full research report (it’s free).
RBC Bearings (RBC) Q1 CY2025 Highlights:
- Revenue: $437.7 million vs analyst estimates of $440 million (5.8% year-on-year growth, 0.5% miss)
- Adjusted EPS: $2.83 vs analyst estimates of $2.70 (4.7% beat)
- Adjusted EBITDA: $131.7 million vs analyst estimates of $134.7 million (30.1% margin, 2.2% miss)
- Revenue Guidance for Q2 CY2025 is $429 million at the midpoint, below analyst estimates of $432.8 million
- Operating Margin: 23%, in line with the same quarter last year
- Market Capitalization: $11.95 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions RBC Bearings’s Q1 Earnings Call
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Kristine Liwag (Morgan Stanley) asked how increased production rates at Boeing and Airbus could scale RBC’s commercial aerospace revenue. CEO Michael Hartnett explained that higher build rates would significantly boost revenue, estimating the impact based on incremental aircraft production.
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Michael Ciarmoli (Truist Securities) inquired about the potential for further gross margin expansion, particularly in aerospace and defense. CFO Rob Sullivan noted there is “runway” for improvement, especially as plant throughput rises and contract renewals come into play in the second half of the year.
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Steve Barger (KeyBanc Capital Markets) questioned how RBC is targeting new customers and regions in its industrial business. Hartnett described efforts to improve accessibility for new customers and expand into underrepresented geographies, especially in North America and select international markets.
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Pete Skibitski (Alembic Global) asked about free cash flow conversion and capital expenditure plans amid potential defense budget increases. Sullivan reiterated the commitment to strong cash flow and proactive capital planning to address future demand.
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Ross Sparenblek (William Blair) sought clarification on what would drive the range in defense growth and the health of key industrial end markets. Hartnett pointed to capacity ramping as the main variable and highlighted mining, aggregates, and logistics as current industrial growth drivers.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) progress on aerospace and defense production increases and related capacity expansions, (2) the pace of industrial recovery in core markets like mining and warehousing, and (3) the impact of ongoing margin improvement initiatives. Additional attention will be paid to any strategic M&A activity and how successfully the company integrates new assets.
RBC Bearings currently trades at $381.36, up from $366.93 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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