RBC Bearings INC

Previous wording

The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation: (a) the bearing and engineered products industries are highly competitive, and this competition could reduce our profitability or limit our ability to grow; (b) the loss of a major customer, or a material adverse change in a major customer’s business, could result in a material reduction in our revenues, cash flows and profitability; (c) weakness in any of the industries in which our customers operate, as well as the cyclical nature of our customers' businesses generally, could materially reduce our revenues, cash flows and profitability; (d) future reductions or changes in U.S. government spending could negatively affect our business; (e) fluctuating supply and costs of subcomponents, raw materials and energy resources, or the imposition of import tariffs, could materially reduce our revenues, cash flows and profitability; (f) our results could be impacted by governmental trade policies and tariffs relating to our supplies imported from foreign vendors or our finished goods exported to other countries; (g) some of our products are subject to certain approvals and government regulations and the loss of such approvals, or our failure to comply with such regulations, could materially reduce our revenues, cash flows and profitability; (h) the retirement of commercial aircraft could reduce our revenues, cash flows and profitability; (i) work stoppages and other labor problems could materially reduce our ability to operate our business; (j) unexpected equipment failures, catastrophic events or capacity constraints could increase our costs and reduce our sales due to production curtailments or shutdowns; (k) we may not be able to continue to make the acquisitions necessary for us to realize our growth strategy; (l) businesses that we have acquired (such as Dodge) or that we may acquire in the future may have liabilities that are not known to us; (m) goodwill and indefinite-lived intangibles comprise a significant portion of our total assets, and if we determine that goodwill and indefinite-lived intangibles have become impaired in the future, our results of operations and financial condition in such years may be materially and adversely affected; (n) we depend he…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation: (a) the bearing and engineered products industries are highly competitive, and this competition could reduce our profitability or limit our ability to grow; (b) the loss of a major customer, or a material adverse change in a major customer’s business, could result in a material reduction in our revenues, cash flows and profitability; (c) weakness in any of the industries in which our customers operate, as well as the cyclical nature of our customers’ businesses generally, could materially reduce our revenues, cash flows and profitability; (d) future reductions or changes in U.S. government spending could negatively affect our business; (e) fluctuating supply and costs of subcomponents, raw materials and energy resources, could materially reduce our revenues, cash flows and profitability; (f) our results could be impacted by U.S. governmental trade policies and tariffs relating to the components and supplies we import from foreign vendors and foreign governmental trade policies and tariffs relating to our finished goods exported to other countries; (g) some of our products are subject to certain approvals and government regulations and the loss of such approvals, or our failure to comply with such regulations, could materially reduce our revenues, cash flows and profitability; (h) the retirement of commercial aircraft could reduce our revenues, cash flows and profitability; (i) work stoppages and other labor problems could materially reduce our ability to operate our business; (j) unexpected equipment failures, catastrophic events or capacity constraints could increase our costs and reduce our sales due to production curtailments or shutdowns; (k) we may not be able to continue to make the acquisitions necessary for us to realize our growth strategy; (l) businesses that we have acquired (such as Dodge or VACCO) or that we may acquire in the future may have liabilities that are not known to us; (m) goodwill and indefinite-lived intangibles comprise a significant portion of our total assets, and if we determine that goodwill and indefinite-lived intangibles have become impaired in the future, our results of operations and financial condition in such years may …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We are a leading international manufacturer of highly engineered precision bearings, components and essential systems for the industrial, aerospace and defense industries. Our precision solutions are integral to the manufacture and operation of most machines and mechanical systems, reduce wear to moving parts, facilitate proper power transmission, and reduce damage and energy loss caused by friction. While we manufacture products in all major bearings categories, we focus primarily on the higher end of the bearing and engineered component markets where we believe our value-added manufacturing and engineering capabilities enable us to differentiate ourselves from our competitors and enhance profitability. We believe our expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete. With 53 facilities in 11 countries, of which 38 are manufacturing facilities, we have been able to significantly broaden our end markets, products, customer base and geographic reach.

Current wording

We are a leading international manufacturer of highly engineered precision bearings, components and essential systems for the aerospace, defense and industrial industries. Our precision solutions are integral to the manufacture and operation of most machines and mechanical systems, reduce wear to moving parts, facilitate proper power transmission, and reduce damage and energy loss caused by friction. While we manufacture products in all major bearing categories, we focus primarily on the higher end of the bearing market where we believe our value-added manufacturing and engineering capabilities enable us to differentiate ourselves from our competitors and enhance profitability. We believe our unique expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete. With 60 facilities in 11 countries, of which 42 are manufacturing facilities, we have been able to significantly broaden our end markets, products, customer base and geographic reach. We have a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy, fiscal 2026 will have 52 weeks and fiscal 2025 had 52 weeks. Both the first quarter of fiscal 2026 and the first quarter of fiscal 2025 had 13 weeks.

Previous wording

Our chief operating decision maker (CODM) makes operating decisions, assesses the performance of the business, and allocates resources under two reportable business segments – Aerospace/Defense and Industrial:

Current wording

We currently operate under two reportable business segments – Aerospace/Defense and Industrial:

Previous wording

Our net sales for the three-month period ended December 28, 2024 increased 5.5% compared to the same period last fiscal year. The increase in net sales was a result of a 10.7% increase in our Aerospace/Defense segment and 2.7% increase in our Industrial segment. Our backlog, as of December 28, 2024 was $896.5 compared to $821.5 as of March 30, 2024.

Current wording

Our net sales for the three-month period ended June 28, 2025 increased 7.3% compared to the same period last fiscal year. The increase in net sales was a result of a 10.4% increase in our Aerospace/Defense segment and a 5.5% increase in our Industrial segment. Our backlog, as of June 28, 2025 was $1,017.3 compared to $940.7 as of March 29, 2025.

Previous wording

We are continuing to see the expansion of our commercial aerospace business, which experienced a 14.6% increase in net sales for the three-month period ended December 28, 2024 versus the same period last fiscal year. We anticipate growth in these markets to continue through the rest of the current fiscal year and beyond. Orders have continued to grow as evidenced by our backlog. Defense net sales, which represented approximately 30.9% of segment net sales during the quarter, were up 3.0% quarter over quarter. We expect this growth to continue throughout the current fiscal year and beyond as we are gearing up to fulfill the substantial number of defense orders in our backlog. Net sales in our Industrial segment have increased 2.7% compared to the comparable period in the prior year and our margins have continued to improve driven by continuous operational improvements and product mix.

Current wording

We are continuing to see the expansion of the commercial aerospace business, which experienced a 9.6% increase in net sales for the three-month period ended June 28, 2025 versus the same period last fiscal year. We anticipate this growth to continue through the rest of the current fiscal year and beyond. Orders have continued to grow as evidenced by the increase in our backlog. Defense sales, which represented approximately 35.2% of segment sales during the quarter, were up 11.9% quarter over quarter. We expect this growth to continue throughout the current fiscal year and beyond as we are gearing up to fulfill the substantial number of defense orders in our backlog. Our industrial business continued to demonstrate strength in distribution across several major end markets, notably including mining and metals, warehousing, and aggregates.

Previous wording

The Company expects net sales to be approximately $434.0 to $444.0 in the fourth quarter of fiscal 2025, an increase of 4.9% to 7.3% compared to the fourth quarter of 2024.

Current wording

The Company expects net sales to be approximately $445.0 to $455.0 in the second quarter of fiscal 2026, an increase of 11.8% to 14.4% compared to the second quarter of fiscal 2025.

Previous wording

We believe that operating cash flows and available credit under the Revolving Credit Facility will provide adequate resources to fund internal growth initiatives for at least the next 12 months. As of December 28, 2024, we had cash and cash equivalents of$60.6, of which approximately $22.4 was cash held by our foreign subsidiaries. We paid down $100.0 of the Term Loan during the third quarter of fiscal 2025.

Current wording

We believe that operating cash flows and available credit under the Revolving Credit Facility will provide adequate resources to fund internal growth initiatives for the foreseeable future, including at least the next 12 months. As of June 28, 2025, we had cash of $132.9, of which approximately $28.0 was cash held by our foreign operations, although in July 2025 we used $75.0 of our domestic cash to fund a portion of the purchase price for VACCO.

Previous wording

Net income attributable to common stockholders for the third quarter of fiscal 2025 was $56.9 compared to $40.8 for the same period last fiscal year.

Current wording

Net income attributable to common stockholders for the first quarter of fiscal 2026 was $68.5 compared to $55.7 for the same period last fiscal year.

Previous wording

SG&A for the third quarter of fiscal 2025 was $70.1, or 17.8% of net sales, as compared to $63.9, or 17.1% of net sales, for the same period of fiscal 2024. The increase in SG&A was primarily driven by increased personnel costs, stock compensation costs, travel costs and professional fees.

Current wording

SG&A for the first quarter of fiscal 2026 was $73.9, or 16.9% of net sales, as compared to $67.6, or 16.6% of net sales, for the same period of fiscal 2025. The increase in SG&A was primarily driven by increased personnel costs and IT costs.

Previous wording

Other operating expenses for the third quarter of fiscal 2025 totaled $19.2 compared to $18.9 for the same period last fiscal year. For the third quarter of fiscal 2025, other operating expenses included $17.9 of amortization of intangible assets and $1.3 of other items. For the third quarter of fiscal 2024, other operating expenses included $17.7 of amortization of intangible assets, $0.1 of restructuring costs and $1.1 of other items.

Current wording

Other operating expenses for the first quarter of fiscal 2026 totaled $20.2 compared to $18.9 for the same period last fiscal year. For the first quarter of fiscal 2026, other operating expenses included $17.9 of amortization of intangible assets, $1.2 of restructuring costs, $0.1 of acquisition costs and $1.0 of other expense items. For the first quarter of fiscal 2025, other operating expenses included $17.8 of amortization of intangible assets and $1.1 of other items.

Previous wording

Interest expense, net, consists of interest charged on the Company’s debt arrangements and amortization of deferred financing fees, offset by interest income (see “Liquidity and Capital Resources” below). Interest expense, net, was $14.2 for the third quarter of fiscal 2025 compared to $19.3 for the same period last fiscal year. The decrease in interest expense between the periods was due to the debt reduction efforts made by the Company over the past fiscal year and the effects of the Interest Rate Swap and the Cross Currency Swap. See “Liquidity and Capital Resources” below for more information regarding the Interest Rate Swap and the Cross Currency Swap.

Current wording

Interest expense, net, consists of interest charged on the Company’s debt agreements and amortization of deferred financing fees, offset by interest income (see “Liquidity and Capital Resources” below). Interest expense, net, was $12.2 for the first quarter of fiscal 2026 compared to $17.2 for the same period last fiscal year. The decrease in interest expense between the periods was due to the debt reduction efforts, as well as the Cross Currency Swap, which has enabled us to better manage interest costs.

Previous wording

Other non-operating income was $1.8 for the first nine months of fiscal 2025 and consisted primarily of a $4.0 legal settlement partially offset by post-retirement benefit costs and foreign exchange gains and losses. Other non-operating expenses were $0.4 for the first nine months of fiscal 2024 and consisted primarily of post-retirement benefit costs and foreign exchange gains and losses partially offset by $1.6 of insurance proceeds received.

Current wording

Other non-operating expenses were $1.2 for the first quarter of fiscal 2026 compared to $0.4 for the same period in the prior fiscal year and consisted primarily of post-retirement benefit costs and foreign exchange gains and losses.

Previous wording

Income tax expense for the three-month period ended December 28, 2024 was $16.8 compared to $10.2 for the three-month period ended December 30, 2023. Our effective income tax rate for the three-month period ended December 28, 2024 was 22.5% compared to 18.1% for the three-month period ended December 30, 2023. The effective income tax rate for the three-month period ended December 28, 2024 of 22.5% included $0.8 of tax benefits associated with stock-based compensation. The effective income tax rate without discrete items for the three-month period ended December 28, 2024 would have been 23.5%. The effective income tax rate for the three-month period ended December 30, 2023 of 18.1% included $1.9 of tax benefits associated with stock-based compensation partially offset by $0.2 of other items. The effective income tax rate without discrete items for the three-month period ended December 30, 2023 would have been 21.2%.

Current wording

Income tax expense for the three-month period ended June 28, 2025 was $19.2 compared to $18.5 for the three-month period ended June 29, 2024. Our effective income tax rate for the three-month period ended June 28, 2025 was 21.9% compared to 23.1% for the three-month period ended June 29, 2024. The effective income tax rate for the three-month period ended June 28, 2025 of 21.9% included $2.3 of tax benefits associated with stock-based compensation partially offset by $1.3 of other items. The effective income tax rate without discrete items for the three-month period ended June 28, 2025 would have been 23.1%. The effective income tax rate for the three-month period ended June 29, 2024 of 23.1% included $0.6 of discrete tax benefits associated with stock-based compensation. The effective income tax rate without discrete items for the three-month period ended June 29, 2024 would have been 23.8%.

Previous wording

Net sales increased $14.0, or 10.7%, for the three months ended December 28, 2024 compared to the same period last fiscal year. Our commercial aerospace markets, which consisted of $78.0 of OEM and $20.9 of distribution and aftermarket, increased by 14.6% compared to fiscal 2024 when OEM net sales were $67.2 and distribution and aftermarket net sales were $19.1. This was driven by strong execution on the orders we have seen in recent periods in both the OEM markets and in the aftermarket. Our defense markets, which consisted of $32.5 of OEM and $11.8 of distribution and aftermarket, increased by 3.0% compared to fiscal 2024 when OEM net sales were $35.9 and distribution and aftermarket net sales were $7.0. The increase in defense sales was driven by marine, helicopters and missiles.

Current wording

Net sales increased $15.5, or 10.4%, for the three months ended June 28, 2025 compared to the same period last fiscal year. Our commercial aerospace markets, which consisted of $83.6 of OEM sales and $23.0 of distribution and aftermarket sales, increased by 9.6% compared to fiscal 2025 when OEM net sales were $78.5 and distribution and aftermarket net sales were $18.8. The OEM markets have continued to improve as build rates have steadily increased over the last several months. We have also been expanding our footprint in the aftermarket as air travel has continued to increase year over year. Our defense markets, which consisted of $40.6 of OEM and $17.4 of distribution and aftermarket, increased by 11.9% compared to fiscal 2025 when OEM net sales were $40.2 and distribution and aftermarket net sales were $11.6. The increase in defense sales was driven by marine and missiles and reflects continued growth in demand which is evident by our growing backlog.

Previous wording

Gross margin as a percentage of segment net sales was 40.8% for the third quarter of fiscal 2025 compared to 40.1% for the same period last fiscal year. The increase in gross margin as a percentage of net sales was primarily driven by efficiencies achieved at the plants in part due to increased sales volumes and favorable product mix.

Current wording

Gross margin as a percentage of segment net sales was 42.6% for the first quarter of fiscal 2026 compared to 42.3% for the same period last fiscal year. The increase in gross margin as a percentage of net sales was primarily driven by efficiencies achieved at the plants in part due to increased sales volumes and favorable product mix. This margin profile is expected to continue as the commercial aerospace industry continues to expand and we continue to enhance our manufacturing processes.

Previous wording

Net sales increased $6.5 for the three months ended December 28, 2024 compared to the same period last fiscal year. We saw strength in the logistics and warehousing, food and beverage, aggregate and cement and grain markets offset by weakness in the machine tools, semicon and oil and gas markets. Industrial OEM net sales were $72.7 and $79.4 for the three month periods ended December 28, 2024 and December 30, 2023, respectively. Industrial net sales to distribution and the aftermarket were $178.5 and $165.3 for the three month periods ended December 28, 2024 and December 30, 2023, respectively.

Current wording

Net sales increased $14.2, or 5.5%, for the three months ended June 28, 2025 compared to the same period last fiscal year. We saw improvements in nearly all of our end markets, including mining and metals, warehousing and food and beverage, partially offset by softness in semicon. Industrial OEM sales were $78.5 and $81.8 for the three month periods ended June 28, 2025 and June 29, 2024, respectively. Industrial sales to distribution and the aftermarket were $192.9 and $175.4 for the three month periods ended June 28, 2025 and June 29, 2024, respectively.

Previous wording

Gross margin for the three months ended December 28, 2024 was 46.5% of net sales, compared to 42.8% in the comparable period in fiscal 2024. The improved gross margin was due to product mix and manufacturing efficiencies achieved at the plants.

Current wording

Gross margin for the three months ended June 28, 2025 was 46.1% of net sales, compared to 47.0% in the comparable period in fiscal 2025. Gross margin in fiscal 2026 was impacted by $2.9 in restructuring costs related to inventory rationalization efforts at one of our manufacturing plants.

Previous wording

Corporate SG&A was $25.5, or 6.5% of net sales, for the third quarter of fiscal 2025 compared to $21.4, or 5.7% of net sales, for the same period last fiscal year. The quarter over quarter increase was primarily due to increases in professional fees, stock compensation costs, travel costs and personnel costs.

Current wording

Corporate SG&A was $27.3, or 6.3% of net sales, for the first quarter of fiscal 2026 compared to $23.2, or 5.7% of net sales, for the same period last fiscal year. The quarter over quarter increase was primarily due to an increase in personnel costs.

Previous wording

Our ability to meet future working capital, capital expenditure and debt service requirements will depend on our future financial performance, which will be affected by a range of economic, competitive and business factors, particularly interest rates, cyclical changes in our end markets, and our ability to pass through raw material price increases on a timely basis, many of which are outside of our control. In addition, future acquisitions could have a significant impact on our liquidity position and our need for additional funds.

Current wording

Our ability to meet future working capital, capital expenditure and debt service requirements will depend on our future financial performance, which could be affected by a range of economic, competitive and business factors, many of which are outside of our control. These include interest rates, cyclical changes in our end markets, the imposition of trade tariffs, increased prices for steel and other supplies, and our ability to pass through tariffs and price increases on a timely basis. In addition, future acquisitions could have a significant impact on our liquidity position and our need for additional funds.

Previous wording

From time to time, we evaluate our existing facilities and operations and their strategic importance to us. If we determine that a given facility or operation does not have future strategic importance, we may sell, relocate, consolidate or otherwise dispose of that facility or operations. Although we believe our operations would not be materially adversely affected by such dispositions, relocations or consolidations, we could incur significant cash or non-cash charges in connection with them.

Current wording

From time to time, we evaluate our existing facilities and operations and their strategic importance to us. If we determine that a given facility or operation does not have future strategic importance, we may sell, relocate, consolidate or otherwise dispose of that facility or operations. Although we believe our operations would not be materially impaired by such dispositions, relocations or consolidations, we could incur significant cash or non-cash charges in connection with them.

Previous wording

As of December 28, 2024, we had cash and cash equivalents of $60.6, of which approximately $22.4 was cash held by our foreign subsidiaries. We expect that our undistributed foreign earnings will be re-invested indefinitely for working capital, internal growth, and acquisitions for and by certain of our foreign subsidiaries.

Current wording

As of June 28, 2025, we had cash of $132.9, of which approximately $28.0 was cash held by our foreign operations, although in July we used $75.0 of our domestic cash to fund a portion of the purchase price of VACCO. We expect that our undistributed foreign earnings will be re-invested indefinitely for working capital, internal growth, and acquisitions for and by our foreign subsidiaries, with the exception of our Canadian operations as there are no current plans to expand the sales operations within that jurisdiction. As discussed in further detail below, we also have the ability to borrow money from our existing credit facilities.

Previous wording

Amounts outstanding under the Facilities generally bear interest, at the Company’s option, at either, (a) a base rate determined by reference to the higher of (i) Wells Fargo’s prime lending rate, (ii) the federal funds effective rate plus 0.50% and (iii) Term SOFR (as defined in the Credit Agreement based on SOFR, the secured overnight financing rate administered by the Federal Reserve Bank of New York) plus 1.00% or (b) Term SOFR plus a credit spread adjustment of 0.10% plus a margin ranging from 0.75% to 2.00% depending on the Company’s consolidated ratio of total net debt to consolidated EBITDA (as defined in the Credit Agreement). The Facilities are subject to a SOFR floor of 0.00%. As of December 28, 2024, the Company’s margin was 1.00% for SOFR loans, the commitment fee rate was 0.175%, and the letter of credit fee rate was 1.00%. A portion of the Term Loan is subject to the Interest Rate Swap.

Current wording

Amounts outstanding under the Facilities generally bear interest at either, at the Company’s option, (a) a base rate determined by reference to the higher of (i) Wells Fargo’s prime lending rate, (ii) the federal funds effective rate plus 0.50% and (iii) Term SOFR plus 1.00% or (b) Term SOFR plus a credit spread adjustment of 0.10% plus a margin ranging from 0.75% to 2.00% depending on the Company’s consolidated ratio of total net debt to consolidated EBITDA. The Facilities are subject to a SOFR floor of 0.00%. As of June 28, 2025, the Company’s margin was 1.00% for SOFR loans, the commitment fee rate was 0.175%, and the letter of credit fee rate was 1.00%. A portion of the Term Loan is subject to a fixed-rate interest swap.

Previous wording

The Term Loan matures in November 2026 and amortizes in quarterly installments with the balance payable on the maturity date. The Company can elect to prepay some or all of the outstanding balance from time to time without penalty, which will offset future quarterly amortization installments. Due to prepayments previously made, the required future principal payments on the Term Loan are $0 for fiscal 2025, $0 for fiscal 2026, and $500.0 for fiscal 2027. The Revolving Credit Facility expires in November 2026, at which time all amounts outstanding under the Revolving Credit Facility will be payable.

Current wording

The Term Loan matures in November 2026 and amortizes in quarterly installments with the balance payable on the maturity date. The Company can elect to prepay some or all of the outstanding balance from time to time without penalty, which will offset future quarterly amortization installments. Due to prepayments previously made, the required future principal payments on the Term Loan are $0 for fiscal 2026, and $413.0 for fiscal 2027. The Revolving Credit Facility expires in November 2026, at which time all amounts outstanding under the Revolving Credit Facility will be payable.

Previous wording

The Credit Agreement requires the Company to comply with various covenants, including the following financial covenants: (a) a maximum Total Net Leverage Ratio (as defined in the Credit Agreement) of 5.00:1.00, which maximum Total Net Leverage Ratio shall decrease during certain subsequent test periods as set forth in the Credit Agreement (provided that, no more than once during the term of the Facilities, such maximum ratio applicable at such time may be increased by the Company by 0.50:1.00 for a period of 12 months after the consummation of a material acquisition); and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of December 28, 2024 the Company was in compliance with all debt covenants.

Current wording

The Credit Agreement requires the Company to comply with various covenants, including the following financial covenants: (a) a maximum Total Net Leverage Ratio (as defined within the Credit Agreement) of 5.00:1.00, which maximum Total Net Leverage Ratio shall decrease during certain subsequent test periods as set forth in the Credit Agreement (provided that, no more than once during the term of the Facilities, such maximum ratio applicable at such time may be increased by the Company by 0.50:1.00 for a period of twelve (12) months after the consummation of a material acquisition); and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of June 28, 2025, the Company was in compliance with all debt covenants.

Previous wording

As of December 28, 2024, $500.0 was outstanding under the Term Loan and $3.7 of the Revolving Credit Facility was being utilized to provide letters of credit to secure the Company’s obligations relating to certain insurance programs. The Company had the ability to borrow an additional $496.3 under the Revolving Credit Facility as of December 28, 2024. During the three month period ended December 28, 2024, the Company borrowed, $40.0 from the Revolving Credit Facility in order pay down the Term Loan. The $40.0 borrowed from the Revolver was then completely repaid before the end of the fiscal quarter.

Current wording

As of June 28, 2025, $413.0 was outstanding under the Term Loan and $3.7 of the Revolving Credit Facility was being utilized to provide letters of credit to secure the Company’s obligations relating to certain insurance programs. The Company had the ability to borrow an additional $496.3 under the Revolving Credit Facility as of June 28, 2025. Following the $200.0 draw on the Revolving Credit Facility on July 18, 2025 to fund a portion of the purchase price for VACCO, there was $296.3 of undrawn capacity under the Revolving Credit Facility.

Previous wording

In fiscal 2022, RBCA issued $500.0 aggregate principal amount of Senior Notes. The net proceeds from the issuance of the Senior Notes were approximately $492.0, after deducting initial purchasers’ discounts and commissions and offering expenses, and were used to fund a portion of the cash purchase price for the acquisition of Dodge.

Current wording

In fiscal 2022, RBCA issued $500.0 aggregate principal amount of the Senior Notes. The net proceeds from the issuance of the Senior Notes were approximately $492.0, after deducting initial purchasers’ discounts and commissions and offering expenses, and were used to fund a portion of the cash purchase price for the acquisition of Dodge.

Previous wording

The Senior Notes were issued pursuant to the Indenture with Wilmington Trust, National Association, as trustee. The Indenture contains covenants limiting the ability of the Company to (i) incur additional indebtedness or guarantee indebtedness, (ii) declare or pay dividends, redeem stock or make other distributions to stockholders, (iii) make investments, (iv) create liens or use assets as security in other transactions, (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of its assets, (vi) enter into transactions with affiliates, and (vii) sell or transfer certain assets. These covenants contain various exceptions, limitations and qualifications. At any time that the Senior Notes are rated investment grade, certain of these covenants will be suspended.

Current wording

The Senior Notes were issued pursuant to an indenture with Wilmington Trust, National Association, as trustee. This indenture contains covenants limiting the ability of the Company to (i) incur additional indebtedness or guarantee indebtedness, (ii) declare or pay dividends, redeem stock or make other distributions to stockholders, (iii) make investments, (iv) create liens or use assets as security in other transactions, (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of its assets, (vi) enter into transactions with affiliates, and (vii) sell or transfer certain assets. These covenants contain various exceptions, limitations and qualifications. At any time that the Senior Notes are rated investment grade, certain of these covenants will be suspended.

Previous wording

The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by RBC Bearings and RBCA’s domestic subsidiaries that also guarantee the Credit Agreement.

Current wording

The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by RBC Bearings and certain of RBCA’s existing and future wholly-owned domestic subsidiaries that also guarantee the Credit Agreement.

Previous wording

The Senior Notes will mature on October 15, 2029. The Company may redeem some or all of the Senior Notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If the Company sells certain of its assets or experiences specific kinds of changes in control, the Company must offer to purchase the Senior Notes.

Current wording

The Senior Notes will mature on October 15, 2029. The Company may redeem some or all of the Senior Notes at any time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If the Company sells certain of its assets or experiences specific kinds of changes in control, the Company must offer to repurchase the Senior Notes.

Previous wording

The Foreign Credit Line is a CHF 5.0 (approximately $5.4 USD) credit line with Credit Suisse (Switzerland) Ltd. to provide our Swiss subsidiary, Schaublin SA, future working capital, if necessary. As of December 28, 2024, $0.1 was being utilized to provide a bank guarantee. Fees associated with the Foreign Credit Line are nominal.

Current wording

The Foreign Credit Line provides Schaublin SA with a CHF 5.0 (approximately $6.1 USD) credit line to provide future working capital, if necessary. As of June 28, 2025, $0.1 was being utilized to provide a bank guarantee. Fees associated with the Foreign Credit Line are nominal.

Previous wording

In July 2024, Swiss Tool Systems, one of our foreign subsidiaries, purchased the building where it operates for CHF 7.1 (approximately $8.4 USD) and took out a 10-year fixed-rate mortgage on the building for CHF 4.0 (approximately $4.5 USD).

Current wording

In July 2024, Swiss Tool Systems, one of our foreign subsidiaries, purchased the building where it operates for CHF 7.1 (approximately $8.4 USD) and took out a 10-year, 2.9% fixed-rate mortgage on the building for CHF 4.0 (approximately $4.5 USD).

Previous wording

To hedge against this risk, in fiscal 2023, the Company entered into the Interest Rate Swap with a third-party financial counterparty under the Credit Agreement. The Interest Rate Swap was executed to protect the Company from interest rate volatility on our variable-rate Term Loan. The Interest Rate Swap became effective December 30, 2022 and is comprised of a $600.0 notional with a maturity of three years. The notional was $400.0 as of December 28, 2024. We receive a variable rate based on one-month Term SOFR and pay a fixed rate of 4.455%. The notional on the Interest Rate Swap amortizes as follows:

Current wording

To hedge against this risk, in fiscal 2023, the Company entered into the Interest Rate Swap with a third-party financial counterparty under the Credit Agreement. The Interest Rate Swap was executed to protect the Company from interest rate volatility on our variable-rate Term Loan. The Interest Rate Swap became effective December 30, 2022 and is comprised of a $600.0 notional with a maturity of three years. The notional was $100.0 as of June 28, 2025. We receive a variable rate based on one-month Term SOFR and pay a fixed rate of 4.455%. The notional on the Interest Rate Swap amortizes as follows:

Previous wording

During the first nine months of fiscal 2025, we generated cash of $224.4 from operating activities compared to $195.2 during the same period of fiscal 2024. The increase of $29.2 was the result of an increase in net income of $25.2, a favorable change in operating assets and liabilities of $1.7 and the favorable impact of non-cash activity of $2.3. The favorable change in operating assets and liabilities is detailed in the table below. The change in non-cash activity was driven by $7.0 more in stock-based compensation and $0.3 more in depreciation and amortization, offset by $2.6 more in deferred taxes, $0.6 less in amortization of deferred financing costs, $0.6 less in consolidation and restructuring charges, $0.7 less in losses on asset dispositions and $0.5 less in noncash operating lease expense.

Current wording

During the first three months of fiscal 2026, we generated cash of $120.0 from operating activities compared to $97.4 during the same period of fiscal 2025. The increase of $22.6 was the result of an increase in net income of $7.1, a favorable change in operating assets and liabilities of $12.9 and a favorable impact of non-cash activity of $2.6. The favorable change in operating assets and liabilities is detailed in the table below. The change in non-cash activity was driven by $0.1 more stock-based compensation, $0.2 more amortization of deferred financing costs and $3.8 more restructuring costs, offset by $0.4 less in depreciation and amortization, $0.5 less deferred taxes and a $0.6 gain on asset dispositions.

Previous wording

The following table summarizes the impact on cash flow from operating assets and liabilities for fiscal 2025 versus fiscal 2024.

Current wording

The following table summarizes the impact on cash flow from operating assets and liabilities for the first quarter of fiscal 2026 versus the first quarter of fiscal 2025.

Previous wording

During the first nine months of fiscal 2025, we used $35.6 for investing activities as compared to $42.7 used in the first nine months of fiscal 2024. This decrease in cash used was primarily attributable to a $19.3 decrease in business acquisition costs and $0.3 fewer proceeds from the sale of assets while capital expenditures increased $11.9 period over period.

Current wording

During the first three months of fiscal 2026, we used $15.7 for investing activities as compared to $9.0 used in the first three months of fiscal 2025. This increase in cash used was attributable to a $6.7 increase in capital expenditures.

Previous wording

During the first nine months of fiscal 2025, we used cash of $191.3 for financing activities compared to $147.0 in the first nine months of fiscal 2024. This increase in cash used was primarily attributable to $60.4 more in payments related to the Revolving Credit Facility, $25.0 more payments made on outstanding debt, $0.7 more principal payments made on finance lease obligations and $1.0 more repurchases of common stock partially offset by $16.2 more exercises of stock-based awards, $22.0 in proceeds related to the Revolving Credit Facility, and $4.5 in proceeds related to the Swiss Tool mortgage.

Current wording

During the first three months of fiscal 2026, we used cash of $7.9 for financing activities compared to $74.7 in the first three months of fiscal 2025. This decrease in cash used was primarily attributable to $60.0 less payments made on the Term Loan, $5.7 less in preferred stock dividends paid and $10.3 more in exercises of stock-based awards partially offset by $5.0 more repayments of revolving credit facilities, $4.1 more repurchases of common stock and $0.1 more payments on finance lease obligations.

Previous wording

Our capital expenditures were $35.6 for the first nine months of fiscal 2025 compared to $23.7 for the same period in the prior fiscal year. We expect to make additional capital expenditures of $10.0 to $15.0 during the remainder of fiscal 2025 in connection with our existing business. We expect to fund these capital expenditures principally through existing cash and internally generated funds. We may also make substantial additional capital expenditures in connection with acquisitions.

Current wording

Our capital expenditures were $15.7 for the three-month period ended June 28, 2025 compared to $9.0 for the three-month period ended June 29, 2024. We expect capital expenditures for fiscal 2026 will be between 3.0% to 3.5% of our net sales for the fiscal year. We expect to fund these capital expenditures principally through existing cash and internally generated funds. We may also make substantial additional capital expenditures in connection with acquisitions.

Previous wording

The Company’s fixed contractual obligations and commitments are primarily comprised of our debt obligations disclosed in Note 10 in Part I, Item 1 of this report. We also have lease obligations which are materially consistent with what we disclosed in our Annual Report.

Current wording

The Company’s fixed contractual obligations and commitments are primarily comprised of the Credit Agreement and the Senior Notes. We also have lease obligations which are materially consistent with what we disclosed in our Annual Report.

Previous wording

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We believe the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Notes to the Consolidated Financial Statements in our Annual Report describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. Actual results in these areas could differ from management’s estimates. There were no significant changes in our critical accounting estimates during the first nine months of fiscal 2025.

Current wording

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We believe the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Notes to the Consolidated Financial Statements in our Annual Report describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. Actual results in these areas could differ from management’s estimates. There were no significant changes in our critical accounting estimates during the first quarter of fiscal 2026.