RBC Bearings(RBC) - 2025 Q4 - Annual Report

Financial Performance - For the fiscal year ended March 29, 2025, net sales were $1,043.5 million for the Industrial segment, representing 64% of total sales, and$ 592.8 million for the Aerospace/Defense segment, representing 36% of total sales[26]. - Net sales increased by 4.9% year over year, driven by a 14.1% increase in Aerospace and Defense segment sales and a 0.2% increase in Industrial segment sales[153]. - Net income attributable to common stockholders rose by $46.9 million, or 25.0%, to$ 233.8 million in fiscal 2025[165]. - Gross margin improved to 44.4% of sales in fiscal 2025, up from 43.0% in fiscal 2024, reflecting product mix and cost efficiencies[166]. - SG&A expenses increased by $25.8 million, or 10.2%, to$ 279.3 million in fiscal 2025, primarily due to personnel and IT costs[167]. - Interest expense decreased by $18.9 million, or 23.9%, to$ 59.8 million in fiscal 2025, attributed to debt reduction efforts[169]. - The effective income tax rate for fiscal 2025 was 21.1%, up from 19.8% in fiscal 2024, influenced by various discrete items[173]. - The company generated $293.6 million from operating activities in fiscal 2025, an increase of$ 18.9 million compared to $274.7 million in fiscal 2024[205]. Market Segments - The Industrial market includes diverse sectors such as construction, mining, and food and beverage, with major customers including Caterpillar and Halliburton[19][20]. - The Aerospace/Defense market is driven by new aircraft build rates and military modernization programs, with key customers including the U.S. Department of Defense and Boeing[21][24]. - Aerospace and Defense segment sales rose by 14.1% year over year, with commercial aerospace increasing by 13.3% and defense sales up by 15.9%[154]. - Industrial segment sales increased by 0.2% year over year, led by a 1.4% rise in distribution and aftermarket sales, while OEM sales decreased by 2.1%[155]. Customer and Sales Strategy - The company aims for growth and margin improvement through new product introductions and expansion of aftermarket sales[20]. - The company focuses on expanding its sales force with industry-experienced personnel to support its geographic and market expansion strategy[44]. - Approximately 44% of the company's net sales during fiscal 2025 were generated from its top ten customers, indicating a significant reliance on a limited customer base[79]. - The company aims to increase aftermarket sales to enhance revenue continuity and predictability[151]. Operations and Facilities - The company operates 54 facilities across 11 countries, with 38 dedicated to manufacturing, enhancing its geographic reach and customer base[14]. - The company employs 5,334 people globally, with 3,754 at U.S. facilities and 1,580 at international locations, emphasizing a robust workforce[56]. - The company owns or leases 38 manufacturing facilities across five countries, with 26 located in the U.S.[126]. Financial Position and Debt - The company incurred$ 1,800.0 million in total debt to finance the Dodge acquisition, with total debt standing at $920.1 million as of March 29, 2025[114]. - The company had$ 413.0 million outstanding under the Term Loan and $5.0 million under the Revolving Credit Facility as of March 29, 2025[193]. - The Term Loan matures in November 2026, with required future principal payments of$ 413.0 million for fiscal 2027[189]. - The company issued $500.0 million aggregate principal amount of 4.375% Senior Notes due 2029, with net proceeds of approximately$ 492.0 million used for acquisitions[194]. Risks and Challenges - The company faces competitive pressures in the bearings and engineered components industries, which could limit its ability to increase prices and negatively impact revenues and profitability[78]. - Fluctuating supply and costs of raw materials, particularly steel, pose risks to the company's revenues and profitability due to potential price increases and supply disruptions[84]. - The company is subject to various government regulations, and failure to comply could materially reduce revenues and profitability[89]. - The company relies on its IT systems for operations, and any cyber events or IT security threats could disrupt operations and negatively impact financial performance[94]. - The company has collective bargaining agreements covering approximately 7% of its U.S.-based hourly employees, and labor disputes could materially affect operations[96]. Growth and Acquisitions - The company has completed 29 acquisitions since 1992, broadening its end markets, products, customer base, and geographic reach[152]. - The company’s growth strategy includes acquisitions, but there is no assurance that it will successfully identify or complete acquisitions on favorable terms[99]. Backlog and Future Outlook - The company's backlog as of March 29, 2025, was $940.7 million, an increase from$ 821.5 million as of March 30, 2024, indicating strong demand for products[55]. - The company forecasts net sales of approximately $424.0 million to$ 434.0 million for the first quarter of fiscal 2026, representing a growth rate of 4.4% to 6.8% compared to the first quarter of fiscal 2025[157]. - The backlog as of March 29, 2025, was $940.7 million, up from$ 821.5 million as of March 30, 2024, indicating continued growth in commercial aerospace and marine defense markets[157]. Compliance and Internal Controls - The company identified a material weakness in internal control over financial reporting, necessitating a restatement of financial statements for fiscal years 2022, 2021, and 2020[76]. - The company’s ability to comply with financial covenants could be affected by changes in operating performance and economic conditions, potentially leading to defaults[116]. Cybersecurity and Risk Management - The company maintains a cybersecurity risk management program based on the NIST Cybersecurity framework to assess and manage cybersecurity risks[122].