On Friday, RBC Bearings (NYSE:RBC) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below.
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Access the full call at https://event.choruscall.com/mediaframe/webcast.html?webcastid=ANQZfym5
Summary
RBC Bearings reported a strong fiscal fourth quarter 2026 with net sales increasing by 18.3% year-over-year to $518 million, driven by growth in the Aerospace and Defense (A&D) segment and steady industrial business performance.
The company achieved an adjusted diluted EPS of $3.62, up from $2.83 in the previous year, and adjusted EBITDA rose by 21% to $168.9 million.
A&D segment revenue increased by 41.2%, driven by robust demand in defense and space markets, with a backlog totaling approximately $2.3 billion.
RBC Bearings paid down $116 million of debt during the quarter and plans to continue its deleveraging strategy.
For fiscal year 2027, the company expects revenue growth of 14.7% to 17% in Q1, with adjusted gross margins between 45.25% and 45.5%.
The company is investing in additional machinery and floor space to support increasing production rates, particularly for the marine and missile sectors.
Management highlighted strong performance in commercial aircraft, defense, and industrial markets, with plans to expand in the space sector.
RBC Bearings continues to focus on strategic expansion through organic growth and potential acquisitions aligned with current customer segments.
Full Transcript
Josh Caro (Investor Relations Team)
Good morning and thank you for joining us for RBC Bearings’ fiscal fourth quarter 2026 earnings call. I’m Josh Caro 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 and 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 risk 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 Generally Accepted Accounting Principles (GAAP) and non Generally Accepted Accounting Principles (GAAP) financial information. With that, I’ll now turn the call over to Dr. Hartnett.
Dr. Hartnett (Chairman, President and Chief Executive Officer)
Thank you Josh and good morning and thank you all for joining us this morning. As usual, I’ll begin today’s call with a brief review of our financial results and highlight several key trends we see across the sectors. Then I’ll turn the call over to Rob Sullivan who will provide additional details on our financial performance for the fourth quarter. Fourth quarter net sales increased 18.3% year over year to $518 million, driven by continued momentum in our A and D segment and steady growth in our industrial businesses. Consolidated Gross margin was 44.4% for the quarter or 45.3% on an adjusted basis. Adjusted diluted EPS increased year over year to $3.62 compared to $2.83 in the prior year period. Adjusted EBITDA rose 21% to 168.9 million, up from 139.8 million last year. Free cash flow remained a strong 67.5 million and we paid down an additional $116 million of debt during the quarter. Now turning to our two business segments, approximately 57% of our revenue during the quarter came from our industrial segment, 43% came from our A and D segment. Our A and E business has continued to deliver exceptional performance with Segment revenue increasing 41.2% compared to the prior year period. This strong momentum in aerospace and defense is further reflected in our backlog which has continued to expand and currently stands at approximately $2.3 billion. This growth continues to be driven by robust demand across the defense and space markets along with unprecedented commercial aircraft build rates at the major builders for the full year A and D segment was up 32% of which 19.1% was organic. With regard to our business segments, commercial aircraft was up 17.8%, 17.3 of which was organic, defense was up 65.4% and 22.1% was organic. Our Key Revenue drivers First, as many of you know, Marine has been a significant contributor to our backlog growth driven by accelerating build out of the submarine fleet. Given the strategic importance of submarines within today’s defense strategies, we expect this to remain a meaningful tailwind as production rates continue to ramp across all subcontractors for both the Virginia and Columbia class programs as well as fleet spares. We are adding machinery and floor space to accommodate increased production rates as we speak. Next is Missiles Missile related revenue was up significantly this year with revenue for this sector exceeding $45 million in the fiscal year. Some of this gain did come from our recent EVACO acquisition. This growth really reflects increased content we have across several cooperative missile programs and the expanding demand we are seeing. Given the current global conditions, we are planning for sustained growth in requirements for this sector in the current and future years. We also see an impressive ramp in our space business as investments in this sector continue to hit record levels. During the year we saw space revenues come in just above $70 million including 30 million from 8 months contribution by Vacco. This impressive growth, especially considering that space related revenue was only $4 million for RBC back in 2021. As this trend accelerates and private investment grows, space infrastructure is being viewed not only as a major strategic national priority, but as a substantial and essential commercial reality. On top of this strong momentum, we are also supporting the unprecedented, unprecedented production rates for commercial aircraft and engines. As you know, we are deeply embedded across these markets on three continents and as a result expect to see continued growth at both the OEM and aftermarket levels. Turning now to our industrial business, performance remained steady and up during the period with OEM revenue increasing 7.8% and distribution revenue growing at 4.5%. During the quarter we saw strength in aggregates warehousing, food and beverage, grain and semiconductor end markets. As we look to the fiscal year 2027, we are encouraged by the continued strength of our operating environment and the building momentum across many businesses. We firmly believe our strong service levels coupled with our brands, our renowned brands, market positions and technical expertise provide for continued strong financial results long into the future. This was a record year for RBC and as always it is a true team effort. I want to thank our employees across the organization for their hard work, dedication and unwavering commitment to executing our strategy and serving our clients with excellence. With that, I’ll turn the call over to Rob, who will walk us through the financials. Thank you, Mike we closed fiscal year
Rob Sullivan (Vice President and Chief Financial Officer)
2026 with another strong quarter that exceeded our expectations, with net sales growing 18.3%, which led to an 18.9% increase in our reported gross margin. Gross margins were 44.4% for the quarter, or 45.3% on an adjusted basis, compared to 44.2% in the same period last year. Fourth quarter A and D sales increased 41.2% year over year, with the Vaco acquisition excluded. Our A and E business saw an increase in sales of 22.8%, which highlights the continued strong growth in our legacy commercial and defense markets. A and D gross margins during the quarter were 41.6% or 44.2% on an adjusted basis, and industrial margins were 46.5% or 46.2% on an adjusted basis. Excluding VATCO, our aerospace and defense gross margins were 43.7% during the period. We are encouraged by the margin improvement we’ve achieved within amd, driven by increased efficiencies, volumes and newly awarded contracts in the period. Looking ahead, we expect these benefits to continue to further support margin improvement, while recognizing the impact will be gradual as these benefits flow through. On the SGA line, we had total cost of 86.9 million, or 16.8% of net sales for the quarter. This ultimately resulted in an adjusted EBITDA of 168.9 million, or 32.6% of sales for the quarter. That represents an approximate 21% increase in adjusted EBITDA dollars during the quarter compared to the same period last year. Interest expense for the quarter was 11.2 million. This was down 12.5% 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 116 million of debt during the quarter and another 27 million since the end of the fourth quarter. The tax rate in our adjusted EPS calculation was 21% compared to last year’s 21.7%. This led to adjusted diluted earnings per share of $3.62, representing growth of 27.9% year over year. Free cash flow in the quarter came in at 67.5 million with conversion of 73.6% compared to 55 million and 75.7% last year. For the Full year free cash flow was 342.6 million with conversion of 119.1% compared …
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