Artisan Partners Expands Position in RBC Bearings, Citing Aerospace Sector Growth
Investment Firm Bolsters Stake in RBC Bearings
Artisan Partners, through its Artisan Mid Cap Fund, significantly increased its holdings in RBC Bearings Incorporated (NYSE:RBC) during the third quarter of fiscal year 2025. This move follows an initial "GardenSM" position established in the second quarter of the same year, with the initial acquisition valued at $157.19 million. The expansion of this investment suggests a transition to a "CropSM" phase, indicating Artisan Partners' growing conviction in RBC Bearings' accelerating profit cycle and strong market fundamentals. As of October 14, 2025, RBC Bearings closed at $383.98 per share, with a market capitalization of $12.119 billion. The stock recorded a one-month return of 1.10% and a 52-week return of 32.13% as of the same date.
Strategic Market Positioning Drives Investor Confidence
Artisan Partners' investment rationale is grounded in RBC Bearings' robust market positioning. Over 70% of RBC Bearings' revenue is derived from sole- or primary-sourced components, highlighting its critical and entrenched role within customer supply chains and indicating substantial barriers to entry for competitors. The company employs an operational strategy focused on producing ahead of demand, ensuring high on-time delivery and quality performance for its specialized products. Furthermore, RBC Bearings leverages proprietary design software to enhance its product engineering capabilities, providing a distinct competitive advantage in the precision bearings and components sector.
The firm anticipates accelerated commercial aerospace growth for RBC Bearings, particularly as Boeing's production recovers and Airbus continues its ramp-up of next-generation aircraft programs. These long-term contracts with major aerospace manufacturers are a key driver for the company's projected growth.
Financial Performance and Growth Trajectory
RBC Bearings reported net sales of $436.0 million for the first quarter of fiscal year 2026, marking a 7.3% increase over the previous year. The Aerospace/Defense segment saw a 10.4% rise, while the Industrial segment advanced 5.5%. Gross margin for the quarter was 44.8%. The company anticipates net sales for the second quarter of fiscal 2026 to be between $445.0 million and $455.0 million, representing an 11.8% to 14.4% growth rate compared to the prior year. Gross margin for Q2 is expected to remain stable, in the range of 44.0% to 44.25%.
Long-term projections indicate substantial expansion, with RBC Bearings forecasting $2.3 billion in revenue and $445.8 million in earnings by fiscal year 2028, necessitating an 11.1% yearly revenue growth. This outlook is supported by a strong backlog and the successful integration of the VACCO Industries acquisition, which expanded RBC Bearings' capabilities in the space and naval defense channels. The VACCO acquisition, completed for $310 million, is expected to contribute $15-20 million in Q2 revenue and enhance future margins.
Financially, RBC Bearings maintains a healthy position, with a current ratio of 3.26, indicating strong liquidity, and a moderate debt-to-equity ratio of 0.34.
Broader Aerospace Context and Future Outlook
The aerospace and defense sector continues to present significant opportunities for RBC Bearings. Both Boeing and Airbus are engaged in efforts to stabilize and increase production, with both manufacturers holding substantial order backlogs that extend for years. Boeing's backlog stands at 6,528 aircraft (11.5 years of production), while Airbus has a larger backlog of 8,617 aircraft (10.5 years of production). The ongoing "jet race" between these giants, particularly in scaling A320neo and 737 MAX output, directly benefits component suppliers like RBC Bearings.
Dr. Michael J. Hartnett, Chairman and CEO of RBC Bearings, affirmed the company's strategic direction:
> "We have a well-defined business plan in most of our core businesses with a strong five-year outlook that's executable."
He also emphasized the potential for the VACCO integration to improve margins over the next 18 to 24 months.
While the outlook is positive, challenges remain. Supply chain disruptions continue to pose a risk, potentially affecting material procurement and production schedules across the aerospace industry. However, the confirmed long-term contracts and the strategic focus on defense build-outs through 2030-2032 position RBC Bearings favorably for sustained growth amidst these dynamics. The company's ability to consistently deliver critical, highly engineered components ensures its continued relevance in a demanding market.
