General

RBC Bearings manufactures highly engineered precision bearings and components for the industrial, defense, and aerospace industries. The company has a leading position in many of its markets due to its value-added manufacturing and engineering capabilities. RBC operates 54 facilities across 11 countries, with 38 manufacturing facilities. The company has two business segments:

Aerospace/Defense - Produces bearings and precision components for commercial aerospace, defense aerospace, marine defense, and ground defense applications.

Industrial - Produces bearings, gearings, and precision components for various industrial applications including power transmission, construction, mining, agriculture, trucking, automotive, semiconductor production, and more.

RBC’s strategy focuses on:

• Developing innovative solutions
• Expanding customer base and penetrating new markets
• Increasing aftermarket sales of replacement parts
• Pursuing selective acquisitions

Outlook

• Net sales increased 6.2% to $1,560.3 million driven by a 20.7% increase in Aerospace/Defense sales.
  
• Industrial sales grew 0.2% year-over-year.
• Net income rose 30.1% to $186.9 million.

RBC expects continued strong performance:

• Backlog grew to $726.1 million, up 9.5% year-over-year.
  
• Forecasting 7-8% sales growth in Q1 FY2025.

Sources of Revenue

• 98% from product sales, 2% from services.
• Contract with customer exists when purchase order is accepted.

Cost of Sales

• Primarily driven by raw materials, purchased components, outside processing, depreciation, and overhead.
  
• Managed inflation through changing buying patterns, expanding vendor network, passing through price increases, and strategic sourcing.

Fiscal 2024 vs. Fiscal 2023

Segment Information

Aerospace/Defense

• Sales up 20.7% driven by growth in commercial aerospace and defense.
• Backlog and orders point to continued growth.
  

Industrial

• Sales up 0.2% led by energy, mining and general industrial markets.
  
• Growth in distribution and aftermarket sales.

Liquidity and Capital Resources

• Strong cash flow from operations of $274.7 million.
• Cash balance of $63.5 million provides adequate liquidity.
• Utilizing credit facilities and cash flow to fund investments and growth initiatives.

Critical Accounting Policies

• Revenue recognition
• Inventory valuation
• Goodwill and intangible assets
• Business combination valuation
• Income taxes

RBC believes judgments related to these accounting policies are appropriate. The company monitors performance metrics monthly and makes adjustments when necessary.