RBC Bearings (RBC) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 FY2025 reached $397.9 million, up 3.2% year-over-year, driven by 12.5% growth in Aerospace/Defense and a 1.4% decline in Industrial sales.

• Net income attributable to common stockholders rose 5.6% to $48.5 million, with adjusted net income up 6.2% and adjusted EPS at $2.29, up 5.1%.

• Backlog grew to $864.0 million as of September 28, 2024, up from $821.5 million at March 30, 2024.

• Temporary shipping disruptions from Hurricane Helene and a customer labor strike reduced net sales by $4–$5 million in the quarter.

• Defense demand remains robust, especially in marine and guided munitions, with a 26.7% year-to-date organic growth.

Financial highlights

• Gross margin for Q2 FY2025 was $173.8 million (43.7% of sales), up from 43.1% last year.

• Adjusted EBITDA reached $123.4 million, up 1.1% year-over-year, with a margin of 31%.

• Cash from operations was $43 million for the quarter and $140.4 million for the first six months, with free cash flow conversion at ~100% of net income.

• Interest expense fell 22% year-over-year to $15.6 million.

• SG&A expenses increased to $69.5 million (17.5% of sales) in Q2, mainly due to higher personnel, stock compensation, and professional fees.

Outlook and guidance

• Q3 FY2025 net sales are projected at $390–$400 million, representing 4.3%–7.0% growth year-over-year.

• Gross margin guidance for Q3 FY2025 is 42.5%–43.5%; SG&A expected at 17.0%–17.5% of net sales.

• Management expects continued robust demand in Aerospace/Defense and Industrial segment to return to growth.

• Operating cash flows and available credit are expected to fund growth initiatives for at least the next 12 months.

• Full-year gross margin improvement forecast remains at ~100 basis points.