RBC Bearings (NYSE:RBC) reported fiscal first-quarter 2027 results marked by double-digit sales growth, higher margins, strong free cash flow and continued debt reduction, driven primarily by demand in Aerospace & Defense and broad-based growth in its Industrial segment.
Net sales increased 19.2% year over year to $519.5 million. Adjusted diluted earnings per share rose 36.6% to $3.88, while adjusted EBITDA increased 28.1% to $181.2 million. The company generated $146.9 million in free cash flow during the quarter and paid down $77 million of debt, followed by another $50 million repayment on its term loan after the quarter ended.
Aerospace, Defense and Space Demand
Aerospace & Defense segment revenue rose 36.9% from the prior-year period, including 16.6% organic growth excluding the VACCO acquisition. Commercial aerospace revenue grew 21.8%, or 20.3% organically, while defense revenue increased 64.6%, including 10% organic growth.
Hartnett said the company is seeing healthy order activity, rising request-for-quote volumes, contract awards and customer requests for more capacity. RBC Bearings is expanding production rates for commercial aircraft and engine programs at several North American and European sites, he said.
The company also highlighted accelerating activity in space. Its space business generated approximately $70 million in fiscal 2026 revenue and contributed $25 million in the fiscal first quarter, Hartnett said. RBC Bearings now serves more than a dozen space customers and sees commercial and government spending supporting a longer-term growth opportunity.
During the question-and-answer session, Hartnett cited SpaceX, Blue Origin, Amazon-related projects and government space programs as sources of activity. He said demand signals from Blue Origin had not changed following a recent launch-pad explosion mentioned by an analyst.
Marine backlog stood at $2.3 billion, much of it tied to marine programs. Hartnett said complex supply-chain issues had constrained production but that the company had resolved most of those issues and expects to expand marine shipments significantly in the second half of fiscal 2027.
Industrial Growth Broadens
Industrial segment sales increased 8.4% year over year. Within the segment, OEM revenue rose 21.5% and distribution revenue increased 3.1%. Hartnett said the company experienced growth in aggregate and cement, food and beverage, warehousing, semiconductors and grain markets.
He told analysts that metals was the only Industrial sector that did not grow during the period, describing it as flat year over year. Growth across the company’s Industrial markets continued through July, according to Hartnett.
Chief Financial Officer Rob Sullivan said Industrial gross margin was 50.2% in the quarter, while Aerospace & Defense gross margin was 44.5%. Industrial adjusted gross margin expanded more than 300 basis points year over year, and Aerospace & Defense margin expanded by more than 180 basis points.
Margins Benefit From Volume, Mix and Tariff Refunds
Consolidated gross margin was 47.7%, compared with 45.4% on an adjusted basis in the prior-year period. Sullivan attributed the improvement to higher production volumes, operating efficiencies, favorable product mix and contract resolutions.
He said the timing of tariff refunds provided nearly 100 basis points of gross-margin benefit during the quarter, primarily in the Industrial segment. Contract resolutions in Aerospace & Defense also contributed to revenue and margin, adding an estimated 50 to 60 basis points of benefit, Sullivan said in response to analyst questions.
Hartnett said Aerospace & Defense margins should continue to improve as newer contracts reflect inflation adjustments and the company benefits from insourcing bottleneck production processes. He said RBC Bearings expects approximately 1.5 points of consolidated margin improvement from the end of fiscal 2026 to the end of fiscal 2027.
SG&A expense totaled $85.8 million, or 16.5% of sales. Interest expense declined 17.2% year over year to $10.1 million, which Sullivan attributed to lower debt and lower interest rates. The adjusted tax rate was 22%, compared with 22.5% a year earlier.
Second-Quarter Outlook and Capital Allocation
For fiscal second-quarter 2027, RBC Bearings projected revenue of $505 million to $515 million, representing year-over-year growth of 10.9% to 13.1%. The outlook implies first-half sales of $1.024 billion to $1.035 billion, or growth of 14.9% to 16.1% from the prior-year period.
- Expected second-quarter adjusted gross margin: 45.5% to 45.75%
- Expected SG&A as a percentage of sales: 16.5% to 16.75%
- Term loan repayment target: remainder to be paid by November 2026
Sullivan said second-quarter margins are expected to decline sequentially because the first and fourth fiscal quarters have historically been the company’s strongest margin periods, while tariff refunds and contract resolutions benefited the first quarter.
Management said its capital-allocation priority remains deleveraging, while Hartnett said the company remains open to acquisitions that complement its existing capabilities and help it serve customers. He added that RBC Bearings is prioritizing long-term customers as demand exceeds available capacity in some areas, rather than accepting short-term orders that could disrupt service levels.
About RBC Bearings (NYSE:RBC)
RBC Bearings Incorporated 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.
