RBC Bearings Incorporated

Geopolitical and trade · Government funding and budget changes

In fiscal 2026, approximately 1% of our net sales were made directly, and we estimate that approximately an additional 7% of our net sales were made indirectly, to the U.S. government to support military or other government projects. Our failure (or the failure of our customers that are prime contractors to the government) to obtain new government contracts, the cancellation of government contracts relating to our products, or reductions in federal budget appropriations for programs in which our products are used could materially reduce our revenues, cash flows and profitability.

Geopolitical and trade · Trade policies tariffs and sanctions

The United States imposes tariffs on many of the raw materials and component parts we import from foreign sources (including our foreign operations) to support our U.S. manufacturing operations. Most notably, steel, which is our largest raw material import, is subject to what is known as a 'Section 232 tariff.' These tariffs increase our cost for imported raw materials and component parts, which decreases our profitability to the extent that we are unable to pass the increased cost on to our customers.

Market and investment · Asset valuation and impairment

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. As of March 28, 2026, we had $2,003.4 of goodwill and $24.3 of indefinite-lived intangibles, representing approximately 40% of our total assets.

International and currency · International operations and emerging markets

We have operations in Australia, England, Canada, France, Germany, India, Mexico, the Peoples Republic of China, Poland and Switzerland. Of our 65 facilities in 11 countries, 21 are located outside the U.S., including 12 manufacturing facilities in four countries. Our foreign operations are subject to the risks inherent in such activities such as: currency devaluations, logistical and communication challenges, costs of complying with a variety of foreign laws and regulations, greater difficulties in protecting and maintaining our rights to intellectual property, difficulty in staffing and managing geographically diverse operations, acts of terrorism or war or other acts that may cause social disruption.

International and currency · Foreign exchange and currency exposure

The majority of our foreign operations utilize the local currency as their functional currency. Foreign currency transaction gains and losses are included in earnings. Because our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and the currencies used by our international operations have had, and will continue to have, an impact on our earnings.

Capital structure and performance · Debt management and refinancing

In fiscal 2022, we incurred $1,800.0 of total debt to finance the acquisition of Dodge Industrial and in July 2025 we incurred $200.0 of debt to finance the acquisition of VACCO Industries. As of March 28, 2026, our total debt was $875.5. This debt could or will have important consequences, including, but not limited to: this debt requires us to make significant interest and principal payments in the future; a substantial portion of our cash flow from operations will be used to repay the principal and interest on our debt, thereby reducing the funds available to us for other purposes.

Credit and liquidity · Debt service and covenant compliance

Our ability to comply with the financial and other covenants contained in our debt instruments could be affected by, among other things, changes in our results of operations, the incurrence of additional indebtedness, the pricing of our products, our success at implementing cost reduction initiatives, our ability to successfully implement our overall business strategy, or changes in industry-specific or general economic conditions which are beyond our control. The breach of any of these covenants could result in a default or event of default under our debt instruments, which, if not cured or waived, could result in our being required to repay these borrowings before their due date.

Market and investment · Interest rate and yield curve risk

Future increases in interest rates would increase the cost of servicing our bank debt (i.e., term loan and revolving credit facility), which could materially reduce our profitability and cash flows.

Capital structure and performance · Dividend policy and capital allocation

Except for a $2.00 per common share special dividend paid in 2014, we have never paid any cash dividends on our common stock and we do not expect to pay cash dividends on the common stock in the foreseeable future. Instead, we plan to apply earnings and excess cash, if any, to the service of our debt, and the expansion and development of our business.

Human capital and workforce · Key personnel dependence and succession

We depend heavily on our senior management and other key personnel, the loss of whom could materially affect our financial performance and prospects. Our business is managed by a number of key personnel, including our CEO Dr. Michael J. Hartnett. Our future success will depend on, among other things, our ability to retain the services of these personnel and to hire their successors and other highly qualified employees at all levels.

Project and contract management · Large contract concentration

As of March 28, 2026, we had an order backlog of $2.3 billion. However, orders included in our backlog may be subject to cancellation, delay or other modifications by our customers and we cannot assure you that these orders will ultimately be fulfilled.

Project and contract management · Service level and performance guarantees

A portion of our revenue is associated with contracts with the U.S. government that require onsite inspection and approval of the products by government personnel before we may ship the products, and we have no control over the timing of those inspections and approvals. If products scheduled for delivery in one quarter are not inspected or approved until the following quarter, the delay would adversely affect our sales and profitability for the quarter in which the shipments were scheduled.

Supply chain and procurement · Raw material availability and cost volatility

Our business is dependent on the availability and costs of subcomponents, raw materials, particularly steel (generally in the form of stainless and chrome steel, which are commodity steel products), and energy resources. The availability and prices of subcomponents, raw materials and energy resources may be subject to change due to, among other things, new laws or regulations, economic inflation, suppliers' allocations to other purchasers, interruptions in production or deliveries by suppliers and changes in exchange rates and supplier costs and profit expectations.

Legal and litigation · Product liability and warranty claims

We are subject to a risk of product and recall-related liability in the event that the failure, use or misuse of any of our products results in personal injury, death or property damage or our products do not conform to our customers' specifications. In particular, our products are installed in a number of types of vehicle fleets, including airplanes, helicopters, trains, automobiles, heavy trucks and farm equipment, many of which may be subject to government-ordered recalls as well as voluntary recalls by the manufacturer.

Legal and litigation · Intellectual property disputes

We could become subject to litigation claiming that our intellectual property or proprietary information infringes the rights of a third party. In that event, we could incur substantial defense costs and, if such litigation is successful, we could be required to pay the claimant damages for our past use of such intellectual property or proprietary information, and we could either be required to pay royalties for our use of it in the future or be prohibited from using it in the future.

Innovation and product development · Intellectual property protection and infringement

Our ability to compete effectively is dependent upon our ability to protect and preserve the intellectual property and proprietary information owned, licensed or otherwise used by us. We have numerous U.S. and foreign trademark registrations and patents. We cannot assure you that our pending trademark and patent applications will result in trademark registrations and issued patents, and our failure to secure rights under these applications may limit our ability to protect the intellectual property rights that these applications were intended to cover.

Market position and competition · Market cyclicality and demand volatility

The mining and construction equipment and other diversified industrial markets to which we sell products are, to varying degrees, cyclical and tend to decline in response to overall declines in industrial production. As a result, our business is also cyclical, and the demand for our products by these customers depends, in part, on overall levels of industrial production, general economic conditions, and business confidence levels.

Market position and competition · Pricing pressure and margin compression

Where our customer contracts permit us to do so, we seek to pass through a significant portion of our additional costs to our customers through steel surcharges or price increases. However, many of our contracts are fixed-price contracts under which we are not able to pass these additional costs on to our customers. Even where we are able to pass these steel surcharges or price increases to our customers, there may be a lag of several months between the time we experience a cost increase and the time we are able to implement surcharges or price increases.

Digital transformation and innovation · Artificial intelligence and automation

We currently utilize artificial intelligence-enabled tools primarily to support administrative and efficiency-focused functions. While these tools are not used to make operational, financial reporting, or customer-related decisions, we are still exposed to certain risks including potential data and security or privacy breaches, reliance on third-party AI service providers, inaccurate or incomplete outputs, and evolving regulatory and legal requirements.

Corporate governance · Shareholder rights and activism

Provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions that might benefit our stockholders or in which our stockholders might otherwise receive a premium for their shares. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management.