Bearings manufacturer RBC Bearings (NYSE:RBC) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 7.3% year on year to $436 million. On top of that, next quarter’s revenue guidance ($450 million at the midpoint) was surprisingly good and 3.8% above what analysts were expecting. Its non-GAAP profit of $2.84 per share was 3.6% above analysts’ consensus estimates.
Is now the time to buy RBC? Find out in our full research report (it’s free).
RBC Bearings (RBC) Q2 CY2025 Highlights:
- Revenue: $436 million vs analyst estimates of $432.4 million (7.3% year-on-year growth, 0.8% beat)
- Adjusted EPS: $2.84 vs analyst estimates of $2.74 (3.6% beat)
- Adjusted EBITDA: $134.9 million vs analyst estimates of $135 million (30.9% margin, in line)
- Revenue Guidance for Q3 CY2025 is $450 million at the midpoint, above analyst estimates of $433.5 million
- Operating Margin: 23.2%, in line with the same quarter last year
- Market Capitalization: $12.73 billion
StockStory’s Take
RBC Bearings’ second quarter results received a positive market response, as the company delivered year-over-year revenue growth and exceeded Wall Street’s expectations. Management credited robust demand in the Aerospace and Defense segment, with particular strength in both commercial and defense aftermarket sales. CEO Michael J. Hartnett highlighted that the aircraft aftermarket expanded 22.6% and defense aftermarket grew 11.9%, while industrial distribution also performed well. The company’s backlog surpassed $1 billion for the first time, with Hartnett noting, “We are well positioned in our markets. We see unprecedented demand in several important areas.”
Looking ahead, management’s guidance reflects optimism about sustained growth in both aerospace and industrial markets, underpinned by strong customer demand and the newly acquired VACCO business. With VACCO expected to contribute to Aerospace and Defense sales, Hartnett stated, “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.” CFO Rob Sullivan added that operational focus will remain on integrating VACCO and maintaining margin discipline as the business scales.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to continued momentum in the Aerospace and Defense segment, steady industrial demand, and initial contributions from the VACCO acquisition.
-
Aerospace and Defense momentum: The Aerospace and Defense segment experienced broad-based strength, with aftermarket sales rising sharply and the commercial side benefiting from production stabilization among major customers like Boeing and Airbus. Management noted contract negotiations for expanded content on key engine programs, which could enhance future revenue streams.
-
Industrial distribution resilience: Despite ongoing sector-specific variability, RBC’s industrial business posted solid growth, with distribution and aftermarket channels up 10%. CEO Hartnett pointed to strong performance in sectors such as aggregate, grain, and food and beverage, although oil and gas and semiconductors remained weak.
-
VACCO acquisition synergies: The addition of VACCO provides immediate scale in marine and space-related defense work, with Hartnett describing “strong synergy” in engineering, manufacturing, and supply chain. Management expects VACCO’s margin expansion to follow a pattern established in prior deals, targeting improved profitability within 18-24 months.
-
Record backlog milestone: The company’s backlog exceeded $1 billion, largely driven by multi-year defense contracts. Hartnett suggested there is a chance of doubling this backlog over the next 12 months, with the majority tied to defense programs extending into the next decade.
-
Operational efficiency and cash flow: Free cash flow conversion reached 152% in the quarter, supported by disciplined working capital management. Sullivan emphasized ongoing efforts to use cash flow for deleveraging and to support continued investment in growth initiatives.
Drivers of Future Performance
Management expects continued growth in aerospace and defense, supported by VACCO integration and stable industrial demand, while monitoring potential headwinds from supply chain constraints and tariffs.
-
VACCO integration impact: The full integration of VACCO is anticipated to drive incremental revenue and operational efficiencies, especially in defense and marine markets. Management believes margin improvements similar to prior acquisitions are achievable within two years, though initial gross margin dilution is expected.
-
Aerospace content expansion: RBC is negotiating new and renewed contracts with major aerospace engine and airframe manufacturers, aiming to expand its share of critical components. Hartnett indicated that content growth on programs such as the GTF Advantage engine should begin to ramp in 2026 and continue through 2030.
-
Industrial demand outlook and risk: Management views industrial demand as sector-dependent, with growth in consumables and distribution offsetting slower OEM segments. The company is watching the impact of recent tax legislation (“Big Beautiful Bill”) on smaller customers, as well as ongoing risks from tariffs and supply chain pressures, particularly for specialty alloys.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will focus on (1) the pace and profitability of VACCO’s integration into the broader Aerospace and Defense business; (2) the ability to secure and execute new multi-year contracts—especially those aimed at increasing content on critical aerospace programs; and (3) early indicators of industrial demand response to recent U.S. tax changes. Execution on margin improvement in newly acquired businesses and navigating supply chain/tariff-related risks will also be key markers of near-term performance.
RBC Bearings currently trades at $404.80, up from $387.01 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
Our Favorite Stocks Right Now
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.