RBC Bearings delivered results ahead of Wall Street expectations in Q3, with the market responding positively to robust revenue growth and non-GAAP earnings. Management attributed this performance primarily to continued strength in the Aerospace and Defense segment, which saw significant order momentum, while the industrial business remained steady. CEO Mike Hartnett highlighted that strong customer demand, particularly from submarine and aircraft engine programs, pushed the company’s backlog to new highs. The company’s ability to secure multiyear contracts and maintain production discipline were key contributors to the quarter’s outperformance.
Is now the time to buy RBC? Find out in our full research report (it’s free for active Edge members).
RBC Bearings (RBC) Q3 CY2025 Highlights:
- Revenue: $455.3 million vs analyst estimates of $450.3 million (14.4% year-on-year growth, 1.1% beat)
- Adjusted EPS: $2.88 vs analyst estimates of $2.73 (5.3% beat)
- Adjusted EBITDA: $137.9 million vs analyst estimates of $137.2 million (30.3% margin, 0.5% beat)
- Revenue Guidance for Q4 CY2025 is $458 million at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 21.5%, in line with the same quarter last year
- Market Capitalization: $13.6 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 From RBC Bearings’s Q3 Earnings Call
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Kristine Liwag (Morgan Stanley) asked for details on the backlog increase and VACCO’s contribution. CFO Robert Sullivan explained approximately $500 million of the backlog was from VACCO, with the remainder driven by strong Aerospace and Defense growth.
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Michael Ciarmoli (Truist Securities) questioned the sequential decline in industrial distribution. Sullivan noted prior quarter strength and said ongoing growth, despite seasonality, shows underlying demand remains steady.
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Steve Barger (KeyBanc Capital Markets) asked about the scale of planned capacity expansion. CEO Mike Hartnett described a business-by-business approach, emphasizing the need for rapid scaling, especially in marine and aerospace programs.
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Scott Deuschle (Deutsche Bank) inquired about the timing of margin benefits from renegotiated contracts. Sullivan said most improvements should be realized immediately after shipments begin under new terms.
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Ronald Epstein (Bank of America) asked about the impact of critical minerals and artificial intelligence. Hartnett said critical minerals have not been an issue, and AI is used for engineering support but does not currently influence staffing levels.
Catalysts in Upcoming Quarters
Over the coming quarters, our team will be monitoring (1) the pace at which RBC Bearings expands capacity to meet growing Aerospace and Defense demand, (2) progress in integrating VACCO and improving its margin profile, and (3) stabilization or recovery in underperforming industrial sub-segments. Updates on contract negotiations and backlog growth will also be important signposts for execution.
RBC Bearings currently trades at $431.93, up from $406.46 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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