UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October ~~2, 2021~~1, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-40840

RBC BEARINGS INCORPORATED
(Exact name of registrant as specified in its charter)

Delaware		95-4372080
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Tribology Center Oxford, CT		~~06478~~
(Address of principal executive offices)		06478 (Zip Code)

(203) 267-7001
(Registrant’s telephone number, including area code)

	~~(203) 267-7001~~
	~~(Registrant’s telephone number, including area code)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	~~ROLL~~RBC	~~Nasdaq NMS~~The New York Stock Exchange
5.00% Series A Mandatory Convertible Preferred Stock, par value $0.01 per share	~~ROLLP~~RBCP	~~Nasdaq NMS~~The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November ~~5, 2021,~~4, 2022, RBC Bearings Incorporated had ~~28,870,241~~29,017,346 shares of Common Stock and 4,600,000 shares of Preferred Stock outstanding.

TABLE OF CONTENTS

Part I -		FINANCIAL INFORMATION	1

~~ITEM~~Item 1.	Consolidated Financial Statements	1
~~ITEM~~Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1819
~~ITEM~~Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3332
~~ITEM~~Item 4.	Controls and Procedures Changes in Internal Control over Financial Reporting	33

Part II -		OTHER INFORMATION	34

~~ITEM~~Item 1.	Legal Proceedings	34
~~ITEM~~Item 1A.	Risk Factors	34
~~ITEM~~Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3734
~~ITEM~~Item 3.	Defaults Upon Senior Securities	3735
~~ITEM~~Item 4.	Mine Safety Disclosures	3735
~~ITEM~~Item 5.	Other Information	3735
~~ITEM~~Item 6.	Exhibits	3835

Part I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

RBC Bearings Incorporated

Consolidated Balance Sheets

(dollars in thousands, except ~~share and~~ per share data)

	October 2, 2021			April 3, 2021			October 1, 2022			April 2, 2022
ASSETS	(Unaudited)						(Unaudited)
Current assets:
Cash and cash equivalents	$	1,348,611		$	151,086		$	88,495		$	182,862
Marketable securities		—			90,249
Accounts receivable, net of allowance for doubtful accounts of $1,912 as of October 2, 2021 and $1,792 as of April 3, 2021		109,650			110,472
Accounts receivable, net of allowance for doubtful accounts of $2,986 as of October 1, 2022 and $2,737 as of April 2, 2022								236,527			247,487
Inventory		370,745			364,147			557,801			516,140
Prepaid expenses and other current assets		30,875			12,248			28,708			15,748
Total current assets		1,859,881			728,202			911,531			962,237
Property, plant and equipment, net		203,166			208,264			378,291			386,732
Operating lease assets, net		34,124			35,664			43,263			44,535
Goodwill		277,758			277,536			1,872,689			1,902,104
Intangible assets, net		150,952			154,399			1,485,016			1,511,515
Other noncurrent assets		41,916			30,195			36,270			38,294
Total assets	$	2,567,797		$	1,434,260		$	4,727,060		$	4,845,417

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	47,594		$	36,336		$	148,870		$	158,606
Accrued expenses and other current liabilities		58,392			43,564			147,584			145,252
Current operating lease liabilities		5,805			5,726			8,283			8,059
Current portion of long-term debt		500			2,612			1,512			1,543
Total current liabilities		112,291			88,238			306,249			313,460
Long-term debt, less current portion		7,105			13,495			1,520,602			1,686,798
Long-term operating lease liabilities		28,756			29,982			35,109			36,680
Deferred income taxes		20,202			17,178			308,956			315,463
Other noncurrent liabilities		62,346			55,416			116,007			120,408
Total liabilities		230,700			204,309			2,286,923			2,472,809

Stockholders’ equity:
Preferred stock, $.01 par value; authorized shares: 10,000,000 as of October 2, 2021 and April 3, 2021, respectively; issued shares: 4,600,000 and 0 as of October 2, 2021 and April 3, 2021, respectively		46			—
Common stock, $.01 par value; authorized shares: 60,000,000 as of October 2, 2021 and April 3, 2021, respectively; issued shares: 29,787,162 and 26,110,320 as of October 2, 2021 and April 3, 2021, respectively		298			261
Preferred stock, $.01 par value; authorized shares: 10,000,000 as of October 1, 2022 and April 2, 2022, respectively; issued shares: 4,600,000 as of October 1, 2022 and April 2, 2022, respectively								46			46
Common stock, $.01 par value; authorized shares: 60,000,000 as of October 1, 2022 and April 2, 2022, respectively; issued shares: 29,975,914 and 29,807,208 as of October 1, 2022 and April 2, 2022, respectively								300			298
Additional paid-in capital		1,524,928			445,073			1,582,455			1,564,261
Accumulated other comprehensive loss		(9,263	)		(10,409	)		(20,208	)		(5,800	)
Retained earnings		891,270			858,852			955,895			886,155
Treasury stock, at cost, 916,679 shares and 884,701 shares as of October 2, 2021 and April 3, 2021, respectively		(70,182	)		(63,826	)
Treasury stock, at cost, 958,854 shares and 928,322 shares as of October 1, 2022 and April 2, 2022, respectively								(78,351	)		(72,352	)
Total stockholders’ equity		2,337,097			1,229,951			2,440,137			2,372,608
Total liabilities and stockholders’ equity	$	2,567,797		$	1,434,260		$	4,727,060		$	4,845,417

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Operations

(dollars in thousands, except ~~share and~~ per share data)

(Unaudited)

Three Months Ended Six Months Ended
October 2,
2021 September 26,
2020 October 2,
2021 September 26,
2020
Net sales $ 160,900 $ 146,335 $ 317,105 $ 302,828
Cost of sales 98,436 89,739 190,868 186,779
Gross margin 62,464 56,596 126,237 116,049
Operating expenses:
Selling, general and administrative 29,674 26,023 59,476 52,852
Other, net 5,667 4,210 8,915 8,020
Total operating expenses 35,341 30,233 68,391 60,872
Operating income 27,123 26,363 57,846 55,177
Interest expense, net 15,770 343 16,089 768
Other non-operating (income)/expense (291 ) 211 (756 ) 253
Income before income taxes 11,644 25,809 42,513 54,156
Provision for income taxes 4,715 5,388 9,585 11,046
Net income 6,929 20,421 32,928 43,110
Preferred stock dividends 510 — 510 —
Net income available to common stockholders $ 6,419 $ 20,421 $ 32,418 $ 43,110

Net income per share available to common stockholders:
Basic $ 0.25 $ 0.82 $ 1.28 $ 1.74
Diluted $ 0.25 $ 0.82 $ 1.27 $ 1.73
Weighted average common shares:
Basic 25,500,393 24,823,658 25,260,728 24,793,245
Diluted 25,775,794 24,957,158 25,544,088 24,944,608

	Three Months Ended					Six Months Ended
	October 1, 2022		October 2, 2021			October 1, 2022		October 2, 2021
Net sales	$	369,167	$	160,900		$	723,247	$	317,105
Cost of sales		218,020		98,436			430,948		190,868
Gross margin		151,147		62,464			292,299		126,237
Operating expenses:
Selling, general and administrative		57,519		40,223			113,347		71,435
Other, net		21,611		5,667			42,465		8,915
Total operating expenses		79,130		45,890			155,812		80,350
Operating income		72,017		16,574			136,487		45,887
Interest expense, net		18,332		15,770			34,131		16,089
Other non-operating (income)/expense		184		(291	)		951		(756	)
Income before income taxes		53,501		1,095			101,405		30,554
Provision for income taxes		9,699		2,447			20,165		7,868
Net income/(loss)		43,802		(1,352	)		81,240		22,686
Preferred stock dividends		5,750		510			11,500		510
Net income/(loss) available to common stockholders	$	38,052	$	(1,862	)	$	69,740	$	22,176

Net income/(loss) per share available to common stockholders:
Basic	$	1.32	$	(0.07	)	$	2.43	$	0.88
Diluted	$	1.31	$	(0.07	)	$	2.40	$	0.87
Weighted average common shares:
Basic		28,758,403		25,500,393			28,714,445		25,260,728
Diluted		29,093,791		25,500,393			29,020,403		25,632,845

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(Unaudited)

	Three Months Ended					Six Months Ended				Three Months Ended						Six Months Ended
	October 2, 2021			September 26, 2020		October 2, 2021		September 26, 2020		October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Net income	$	6,929		$	20,421	$	32,928	$	43,110
Net income/(loss)										$	43,802		$	(1,352	)	$	81,240		$	22,686
Pension and postretirement liability adjustments, net of taxes ⁽¹⁾		318			259		636		519		535			318			1,070			636
Foreign currency translation adjustments		(1,409	)		1,377		510		1,786		(8,993	)		(1,409	)		(15,478	)		510
Total comprehensive income	$	5,838		$	22,057	$	34,074	$	45,415
Total comprehensive income/(loss)										$	35,344		$	(2,443	)	$	66,832		$	23,832

⁽¹⁾

These adjustments were net of tax expense of ~~$82~~$148 and ~~$79~~$82 for the three-month periods ended October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ respectively and ~~$165~~$296 and ~~$158~~$165 for the six-month periods ended October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ respectively.

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Stockholders’ Equity

(dollars in thousands)

(Unaudited)

	Common Stock					Preferred Stock				Additional Paid-in		Accumulated Other Comprehensive			Retained			Treasury Stock						Total Stockholders’			Common Stock				Preferred Stock				Additional Paid-in		Accumulated Other Comprehensive			Retained			Treasury Stock						Total Stockholders’
	Shares			Amount		Shares		Amount		Capital		Income/(Loss)			Earnings			Shares			Amount			Equity			Shares		Amount		Shares		Amount		Capital		Income/(Loss)			Earnings			Shares			Amount			Equity
Balance at April 3, 2021		26,110,320		$	261		—	$	—	$	445,073	$	(10,409	)	$	858,852			(884,701	)	$	(63,826	)	$	1,229,951
Balance at April 2, 2022																												29,807,208	$	298		4,600,000	$	46	$	1,564,261	$	(5,800	)	$	886,155			(928,322	)	$	(72,352	)	$	2,372,608
Net income		—			—		—		—		—		—			25,999			—			—			25,999			—		—		—		—		—		—			37,438			—			—			37,438
Share-based compensation		—			—		—		—		5,772		—			—			—			—			5,772			—		—		—		—		3,819		—			—			—			—			3,819
Repurchase of common stock		—			—		—		—		—		—			—			(31,572	)		(6,264	)		(6,264	)
Exercise of equity awards		135,518			2		—		—		16,679		—			—			—			—			16,681
Change in net prior service cost and actuarial losses, net of tax expense of $83		—			—		—		—		—		318			—			—			—			318
Issuance of restricted stock, net of forfeitures		91,056			—		—		—		—		—			—			—			—			—
Currency translation adjustments		—			—		—		—		—		1,919			—			—			—			1,919
Balance at July 3, 2021		26,336,894		$	263		—	$	—	$	467,524	$	(8,172	)	$	884,851			(916,273	)	$	(70,090	)	$	1,274,376
Net income		—			—		—		—		—		—			6,929			—			—			6,929
Share-based compensation		—			—		—		—		6,224		—			—			—			—			6,224
Preferred stock issuance, net of issuance costs		—			—		4,600,000		46		445,407		—			—			—			—			445,453
Common stock issuance, net of issuance costs		3,450,000			35		—		—		605,642		—			—			—			—			605,677
Preferred stock dividends		—			—		—		—		—		—			(510	)		—			—			(510	)		—		—		—		—		—		—			(5,750	)		—			—			(5,750	)
Repurchase of common stock		—			—		—		—		—		—			—			(406	)		(92	)		(92	)		—		—		—		—		—		—			—			(30,469	)		(5,984	)		(5,984	)
Exercise of equity awards		1,332			—		—		—		131		—			—			—			—			131			13,713		1		—		—		1,459		—			—			—			—			1,460
Change in net prior service cost and actuarial losses, net of taxes of $82		—			—		—		—		—		318			—			—			—			318
Change in net prior service cost and actuarial losses, net of tax expense of $148																												—		—		—		—		—		535			—			—			—			535
Issuance of restricted stock, net of forfeitures		(1,064	)		—		—		—		—		—			—			—			—			—			56,955		—		—		—		—		—			—			—			—			—
Currency translation adjustments		—			—		—		—		—		(1,409	)		—			—			—			(1,409	)		—		—		—		—		—		(6,485	)		—			—			—			(6,485	)
Balance at October 2, 2021		29,787,162		$	298		4,600,000	$	46	$	1,524,928	$	(9,263	)	$	891,270			(916,679	)	$	(70,182	)	$	2,337,097
Balance at July 2, 2022																												29,877,876	$	299		4,600,000	$	46	$	1,569,539	$	(11,750	)	$	917,843			(958,791	)	$	(78,336	)	$	2,397,641
Net income																												—		—		—		—		—		—			43,802			—			—			43,802
Share-based compensation																												—		—		—		—		4,354		—			—			—			—			4,354
Preferred stock dividends																												—		—		—		—		—		—			(5,750	)		—			—			(5,750	)
Repurchase of common stock																												—		—		—		—		—		—			—			(63	)		(15	)		(15	)
Exercise of equity awards																												89,509		1		—		—		8,562		—			—			—			—			8,563
Change in net prior service cost and actuarial losses, net of tax expense of $148																												—		—		—		—		—		535			—			—			—			535
Issuance of restricted stock, net of forfeitures																												8,529		—		—		—		—		—			—			—			—			—
Currency translation adjustments																												—		—		—		—		—		(8,993	)		—			—			—			(8,993	)
Balance at October 1, 2022																												29,975,914	$	300		4,600,000	$	46	$	1,582,455	$	(20,208	)	$	955,895			(958,854	)	$	(78,351	)	$	2,440,137

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Stockholders’ Equity (continued)

(dollars in thousands)

(Unaudited)

	Common Stock					Additional Paid-in		Accumulated Other Comprehensive			Retained		Treasury Stock						Total Stockholders’			Common Stock					Preferred Stock				Additional Paid-in		Accumulated Other Comprehensive			Retained			Treasury Stock						Total Stockholders’
	Shares			Amount		Capital		Income/(Loss)			Earnings		Shares			Amount			Equity			Shares			Amount		Shares		Amount		Capital		Income/(Loss)			Earnings			Shares			Amount			Equity
Balance at March 28, 2020		25,881,415		$	259	$	412,400	$	(6,898	)	$	769,219		(838,982	)	$	(56,981	)	$	1,117,999
Balance at April 3, 2021																							26,110,320		$	261		—	$	—	$	462,616	$	(10,409	)	$	843,456			(884,701	)	$	(63,826	)	$	1,232,098
Net income		—			—		—		—			22,689		—			—			22,689			—			—		—		—		—		—			24,038			—			—			24,038
Share-based compensation		—			—		5,438		—			—		—			—			5,438			—			—		—		—		7,182		—			—			—			—			7,182
Repurchase of common stock		—			—		—		—			—		(31,179	)		(4,391	)		(4,391	)		—			—		—		—		—		—			—			(31,572	)		(6,264	)		(6,264	)
Exercise of equity awards		4,200			—		231		—			—		—			—			231			135,518			2		—		—		16,679		—			—			—			—			16,681
Change in net prior service cost and actuarial losses, net of taxes of $79		—			—		—		260			—		—			—			260
Change in net prior service cost and actuarial losses, net of tax expense of $83																							—			—		—		—		—		318			—			—			—			318
Issuance of restricted stock, net of forfeitures		56,157			—		—		—			—		—			—			—			91,056			—		—		—		—		—			—			—			—			—
Currency translation adjustments		—			—		—		409			—		—			—			409			—			—		—		—		—		1,919			—			—			—			1,919
Balance at June 27, 2020		25,941,772		$	259	$	418,069	$	(6,229	)	$	791,908		(870,161	)	$	(61,372	)	$	1,142,635
Net income		—			—		—		—			20,421		—			—			20,421
Balance at July 3, 2021																							26,336,894		$	263		—	$	—	$	486,477	$	(8,172	)	$	867,494			(916,273	)	$	(70,090	)	$	1,275,972
Net loss																							—			—		—		—		—		—			(1,352	)		—			—			(1,352	)
Share-based compensation		—			—		5,231		—			—		—			—			5,231			—			—		—		—		16,774		—			—			—			—			16,774
Preferred stock issuance, net of issuance costs																							—			—		4,600,000		46		445,407		—			—			—			—			445,453
Common stock issuance, net of issuance costs																							3,450,000			35		—		—		605,642		—			—			—			—			605,677
Preferred stock dividends																							—			—		—		—		—		—			(510	)		—			—			(510	)
Repurchase of common stock		—			—		—		—			—		(62	)		(8	)		(8	)		—			—		—		—		—		—			—			(406	)		(92	)		(92	)
Exercise of equity awards		31,200			1		2,188		—			—		—			—			2,189			1,332			—		—		—		131		—			—			—			—			131
Change in net prior service cost and actuarial losses, net of taxes of $79		—			—		—		259			—		—			—			259
Change in net prior service cost and actuarial losses, net of tax expense of $82																							—			—		—		—		—		318			—			—			—			318
Issuance of restricted stock, net of forfeitures		(2,299	)		—		—		—			—		—			—			—			(1,064	)		—		—		—		—		—			—			—			—			—
Currency translation adjustments		—			—		—		1,377			—		—			—			1,377			—			—		—		—		—		(1,409	)		—			—			—			(1,409	)
Balance at September 26, 2020		25,970,673		$	260	$	425,488	$	(4,593	)	$	812,329		(870,223	)	$	(61,380	)	$	1,172,104
Balance at October 2, 2021																							29,787,162		$	298		4,600,000	$	46	$	1,554,431	$	(9,263	)	$	865,632			(916,679	)	$	(70,182	)	$	2,340,962

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)

	Six Months Ended						Six Months Ended
	October 2, 2021			September 26, 2020			October 1, 2022			October 2, 2021
Cash flows from operating activities:
Net income	$	32,928		$	43,110		$	81,240		$	22,686
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		11,448			11,744
Depreciation and amortization								57,068			16,857
Deferred income taxes		2,993			4,051			(6,523	)		1,276
Amortization of intangible assets		5,409			5,089
Amortization of deferred financing costs		15,682			259			4,338			15,682
Share-based compensation		11,996			10,669			8,173			23,955
Loss/(gain) on disposition of assets		75			588			85			75
Consolidation, restructuring, and other noncash charges		2,378			2,416			318			2,378
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		642			21,267			9,265			642
Inventory		(7,173	)		(4,981	)		(45,176	)		(7,173	)
Prepaid expenses and other current assets		(12,059	)		(2,812	)		(12,954	)		(12,059	)
Other noncurrent assets		(1,310	)		(6,885	)		5,238			(1,310	)
Accounts payable		11,248			(11,554	)		(8,664	)		11,248
Accrued expenses and other current liabilities		14,000			(4,137	)		2,402			14,000
Other noncurrent liabilities		5,217			5,655			(6,430	)		5,217
Net cash provided by operating activities		93,474			74,479			88,380			93,474

Cash flows from investing activities:
Purchase of property, plant and equipment		(6,882	)		(6,008	)
Capital expenditures								(23,076	)		(6,882	)
Proceeds from sale of assets		10			10			510			10
Purchase of marketable securities		(29,982	)		-			-			(29,982	)
Proceeds from sale of marketable securities		120,483			-			-			120,483
Acquisition of business		-			245
Net cash provided by/(used in) investing activities		83,629			(5,753	)
Purchase price adjustments for acquisition of business								22,966			-
Net cash (used in)/ provided by investing activities								400			83,629

Cash flows from financing activities:
Proceeds received from issuance of common stock		605,677			-			-			605,677
Proceeds received from issuance of preferred stock		445,453			-			-			445,453
Finance fees paid in connection with credit facilities and term loans		(32,208	)		-			-			(32,208	)
Repayments of term loans		(8,866	)		(3,287	)		(170,000	)		(8,866	)
Repayments of notes payable		(254	)		(249	)		(240	)		(254	)
Principal payments on finance lease obligations								(2,219	)		-
Preferred stock dividends paid								(11,500	)		-
Exercise of stock options		16,812			2,420			10,023			16,812
Repurchase of common stock		(6,356	)		(4,399	)		(5,999	)		(6,356	)
Net cash provided by/(used in) financing activities		1,020,258			(5,515	)		(179,935	)		1,020,258

Effect of exchange rate changes on cash		164			(114	)		(3,212	)		164

Cash and cash equivalents:
Increase during the period		1,197,525			63,097
Increase/(Decrease) during the period								(94,367	)		1,197,525
Cash and cash equivalents, at beginning of period		151,086			103,255			182,862			151,086
Cash and cash equivalents, at end of period	$	1,348,611		$	166,352		$	88,495		$	1,348,611

Supplemental disclosures of cash flow information:
Cash paid for:
Income taxes	$	10,777		$	6,559		$	34,881		$	10,777
Interest		416			516			30,101			416

See accompanying notes.

RBC Bearings Incorporated

Notes to Unaudited Interim Consolidated Financial Statements

(dollars in thousands, except ~~share and~~ per share data)

1. Basis of Presentation

The interim consolidated financial statements included herein have been prepared by RBC Bearings Incorporated, a Delaware corporation (collectively with its subsidiaries, the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange ~~Commission.~~Commission (“SEC”). The interim financial statements included with this report have been prepared on a consistent basis with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form ~~10-K~~10-K/A for the fiscal year ended April ~~3, 2021.~~2, 2022. We condensed or omitted certain information and footnote disclosures normally included in our annual audited financial statements, which we prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP). As used in this report, the terms “we,” “us,” “our,” “RBC” and the “Company” mean RBC Bearings Incorporated and its subsidiaries, unless the context indicates another meaning.

These statements reflect all adjustments, accruals, and estimates, consisting only of items of a normal recurring nature, that are, in the opinion of management, necessary for the fair presentation of the consolidated financial condition and consolidated results of operations for the interim periods presented. These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Annual Report on Form ~~10-K.~~10-K/A.

The results of operations for the three- and six-month periods ended October ~~2, 2021~~1, 2022 are not necessarily indicative of the operating results for the entire fiscal year ending April ~~2, 2022.~~1, 2023. The three- and six-month periods ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~ each ~~include~~included 13 weeks and 26 weeks, respectively. The amounts shown are in thousands, unless otherwise indicated.

2. Significant Accounting Policies

The Company’s significant accounting policies are detailed in “Note 2 - Summary of Significant Accounting Policies” of our Annual Report on Form ~~10-K~~10-K/A for the year ended April ~~3, 2021.~~ 2, 2022.

Significant changes to our accounting policies as a result of adopting new accounting standards are discussed below.

Recent Accounting Standards Adopted

Not applicable.

Recent Accounting Standards Yet to Be Adopted

In ~~December 2019,~~March 2020, the Financial Accounting Standards Board ~~(FASB)~~(“FASB”) issued Accounting Standards Update ~~(ASU) No. 2019-12,~~(“ASU”) 2020-04, ~~Income Taxes~~Reference Rate Reform (Topic ~~740)~~:848) - ~~Simplifying~~Facilitation of the ~~Accounting for Income Taxes~~Effects of Reference Rate Reform on Financial Reporting. The objective of the standard is to address operational challenges likely to arise in accounting for contract modifications and hedge accounting due to reference rate reform. The amendments in this ASU provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The standard update is effective for all entities as of March 12, 2020 through December 31, 2022. This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022. The Company will adopt this ASU during the third quarter of our fiscal year. The impact of the adoption of this standard update is ~~to simplify~~dependent on the ~~accounting for income taxes by removing certain exceptions to~~Company's contracts modifications as a result of reference rate reform; however, the ~~general principles in Topic 740. This ASU also attempts to improve consistent application~~Company does not expect the adoption of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This standard update is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted this ASU effective April 4, 2021 and the ~~impact of adoption was not material to the Company’s financial position, results of operations or liquidity.~~

~~In August 2020, the FASB issued ASU No. 2020-06, Debt -~~ Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity~~. The~~ amendments ~~in this ASU simplify the complexity~~ associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity. This ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company early adopted this ASU in fiscal 2022.

~~The adoption of this ASU did not~~hedging relationships to have a material impact on ~~our~~the Company's consolidated financial position, results of operations or liquidity. Adoption of this ASU did simplify the accounting of the 5.00% Series A Mandatory Convertible Preferred Stock (“MCPS”) referred to in Note 5 by removing the requirement to assess the financial instrument for beneficial conversion features and clarifying how diluted EPS should be calculated using the “if-converted” method. Refer to Note 6 for further details regarding the “if-converted” method.statements.

Other new pronouncements issued but not effective until after April ~~3, 2021~~1, 2023 are not expected to have a material impact on our financial position, results of operations or liquidity.

3. Revenue from Contracts with Customers

Disaggregation of Revenue

The ~~Company operates in four business~~following table disaggregates total revenue by end market which is how we view our reportable segments with similar economic characteristics, including nature of the products and production processes, distribution patterns and classes of customers. Revenue is disaggregated within these business segments by our two principal end markets: aerospace and industrial. Comparative information of the Company’s overall revenues for the three- and six-month periods ended October 2, 2021 and September 26, 2020 are as follows:(see Note 12):

	Three Months Ended				Six Months Ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Aerospace/Defense	$	103,548	$	92,915	$	202,947	$	183,280
Industrial		265,619		67,985		520,300		133,825
Total	$	369,167	$	160,900	$	723,247	$	317,105

~~Principal End Markets~~

Three Months Ended
October 2, 2021 September 26, 2020
Aerospace Industrial Total Aerospace Industrial Total
Plain $ 49,503 $ 24,576 $ 74,079 $ 51,040 $ 20,013 $ 71,053
Roller 8,892 18,417 27,309 10,674 10,905 21,579
Ball 8,027 16,404 24,431 7,311 13,788 21,099
Engineered Products 16,860 18,221 35,081 18,116 14,488 32,604
$ 83,282 $ 77,618 $ 160,900 $ 87,141 $ 59,194 $ 146,335

Six Months Ended
October 2, 2021 September 26, 2020
Aerospace Industrial Total Aerospace Industrial Total
Plain $ 98,471 $ 48,929 $ 147,400 $ 110,392 $ 39,536 $ 149,928
Roller 17,679 34,877 52,556 23,904 20,575 44,479
Ball 15,237 32,322 47,559 14,333 25,606 39,939
Engineered Products 32,788 36,802 69,590 37,494 30,988 68,482
$ 164,175 $ 152,930 $ 317,105 $ 186,123 $ 116,705 $ 302,828

The following table disaggregates total revenue by geographic origin:

	Three Months Ended				Six Months Ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
United States	$	324,774	$	144,074	$	635,404	$	283,864
International		44,393		16,826		87,843		33,241
Total	$	369,167	$	160,900	$	723,247	$	317,105

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over time versus the amount of revenue recognized for performance obligations satisfied at a point in time:

	Three Months Ended						Six Months Ended
	October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Point-in-time		98	%		96	%		98	%		96	%
Over time		2	%		4	%		2	%		4	%
Total		100	%		100	%		100	%		100	%

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of orders meeting the definition of a contract for which work has not been performed or has been partially performed and excludes unexercised contract options. The duration of the majority of our contracts, as defined by ASC Topic 606, is less than one year. The Company has elected to apply the practical expedient, which allows companies to exclude remaining performance obligations with an original expected duration of one year or less. The aggregate amount of the transaction price allocated to remaining performance obligations for such contracts with a duration of more than one year was approximately ~~$302,874~~$305,457 at October ~~2, 2021.~~1, 2022. The Company expects to recognize revenue on approximately ~~55%~~63% and ~~87%~~91% of the remaining performance obligations over the next 12 and 24 months, respectively, with the remainder recognized thereafter.

Contract Balances

The timing of revenue recognition, invoicing and cash collections affect accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities) on the consolidated balance sheets. These assets and liabilities are reported on the consolidated balance sheets on an individual contract basis at the end of each reporting period.

Contract Assets (Unbilled Receivables) - Pursuant to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable is recorded to reflect revenue that is recognized when (1) the cost-to-cost method is applied and (2) such revenue exceeds the amount invoiced to the customer.

As of October ~~2, 2021~~1, 2022 and April ~~3, 2021,~~2, 2022, current contract assets were ~~$6,743~~$4,707 and ~~$5,584,~~$3,882, respectively, and included within prepaid expenses and other current assets on the consolidated balance sheets. The increase in contract assets was primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations prior to billing partially offset by amounts billed to customers during the period. As of October ~~2, 2021~~1, 2022 and April ~~3, 2021,~~2, 2022, the Company did not have any contract assets classified as noncurrent on the consolidated balance sheets. ~~There were $77 of impairment losses related to the Company’s contract assets during the three and six months ended October 2, 2021.~~

Contract Liabilities (Deferred Revenue) - The Company may receive a customer advance or deposit, or have an unconditional right to receive a customer advance, prior to revenue being recognized. Since the performance obligations related to such advances may not have been satisfied, a contract liability is established. Advance payments are not considered a significant financing component as the timing of the transfer of the related goods or services is at the discretion of the customer.

As of October ~~2, 2021~~1, 2022 and April ~~3, 2021,~~2, 2022, current contract liabilities were ~~$15,368~~$22,414 and ~~$16,998,~~$19,556, respectively, and included within accrued expenses and other current liabilities on the consolidated balance sheets. The ~~decrease~~increase in current contract liabilities was primarily due to ~~the amount of advanced~~advance payments received and ~~reclassifications between current and~~the reclassification of a portion of advance payments received from the noncurrent portion of contract liabilities ~~based on anticipated timing of performance obligations and~~partially offset by revenue recognized ~~during~~on customer contracts. For the ~~period.~~three and six months ended October 1, 2022, the Company recognized revenues of $3,606 and $7,474, respectively, that were included in the contract liability balance as of April 2, 2022. For the three and six months ended October 2, 2021, the Company recognized revenues ~~related to contract liabilities~~ of $2,129 and $6,779, ~~respectively. For~~respectively, that were included in the contract liability balance at April 3, ~~and six months ended September 26, 2020, the Company recognized revenues related to contract liabilities of $1,944 and $7,765, respectively.~~2021.

As of October ~~2, 2021~~1, 2022 and April ~~3, 2021,~~2, 2022, noncurrent contract liabilities were ~~$8,935~~$9,295 and ~~$3,754,~~$10,401, respectively, and included within other noncurrent liabilities on the consolidated balance sheets. The ~~increase~~decrease in noncurrent contract liabilities was primarily due to ~~the amount of advanced~~advance payments received ~~and reclassifications between~~offset by the reclassification of a portion of advance payments received to the current ~~and noncurrent~~portion of contract ~~liabilities based on anticipated timing of performance obligations and revenue recognized during the period.~~liabilities.

~~Accounts Receivable~~Variable Consideration ~~- As~~

The amount of consideration to which the Company expects to be entitled in exchange for the goods and services is not generally subject to significant variations. However, the Company does offer certain customers rebates, prompt payment discounts, end-user discounts, the right to return eligible products, and/or other forms of variable consideration. The Company estimates this variable consideration using the expected value amount, which is based on historical experience. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company adjusts the estimate of revenue at the earlier of when the amount of consideration the Company expects to receive changes or when the consideration becomes fixed. Accrued customer rebates were $38,829 and $35,234 at October ~~2, 2021~~1, 2022 and April ~~3, 2021, accounts receivable with customers, net, were $109,650~~2, 2022, respectively, and ~~$110,472, respectively.~~are included within accrued expenses and other current liabilities on the consolidated balance sheets.

4. Accumulated Other Comprehensive Income (Loss)

The components of comprehensive income (loss) that relate to the Company are net ~~income,~~income/(loss), foreign currency translation adjustments, and pension plan and postretirement benefits.

The following summarizes the activity within each component of accumulated other comprehensive income (loss), net of taxes:

	Currency Translation		Pension and Postretirement Liability			Total			Currency Translation			Pension and Postretirement Liability			Total
Balance at April 3, 2021	$	445	$	(10,854	)	$	(10,409	)
Balance at April 2, 2022									$	860		$	(6,660	)	$	(5,800	)
Other comprehensive income (loss) before reclassifications		510		—			510			(15,478	)		—			(15,478	)
Amounts recorded in/reclassified from accumulated other comprehensive income (loss)		—		636			636			—			1,070			1,070
Net current period other comprehensive income (loss)		510		636			1,146			(15,478	)		1,070			(14,408	)
Balance at October 2, 2021	$	955	$	(10,218	)	$	(9,263	)
Balance at October 1, 2022									$	(14,618	)	$	(5,590	)	$	(20,208	)

5. ~~Stockholders’ Equity~~

~~Preferred Stock~~

We are authorized to issue 10,000,000 shares of preferred stock, $0.01 par value per share, in one or more series and to fix the powers, designations, preferences and relative participating, option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by our stockholders.

On September 24, 2021, we completed an offering of 4,600,000 shares of 5.00% Series A Mandatory Convertible Preferred Stock (“MCPS”) in a public offering registered under the Securities Act of 1933, as amended (the “Securities Act”), including 600,000 shares issued pursuant to the full exercise of the option granted to the underwriters of the MCPS offering to purchase additional shares solely to cover over-allotments. The MCPS has a liquidation preference of $100 per share. The trading symbol for the MCPS is “ROLLP.” The net proceeds from the MCPS offering were approximately $445,453 after deducting underwriting discounts and commissions and offering expenses. On November 1, 2021, the Company used the proceeds to fund a portion of the cash purchase price for the acquisition of the Dodge Mechanical Power Transmission Business (“Dodge”) from ABB Asea Brown Boveri Ltd (“ABB”).

~~As of October 2, 2021, the MCPS had an aggregate liquidation preference of $460,510.~~

Holders of MCPS are entitled to receive, when, as and if declared by our Board of Directors, or an authorized committee thereof, out of funds legally available for payment, cumulative dividends at the annual rate of 5.00% of the liquidation preference of $100 per share, payable in cash or, subject to certain limitations, by delivery of shares of common stock or any combination of cash and shares of common stock, at our election; provided, however, that any unpaid dividends on the MCPS will continue to accumulate as described in the Certificate of Designations that sets forth the rights, preferences and privileges of the MCPS. During the second quarter of fiscal 2022, the Company had accrued dividends of $510.

Subject to certain exceptions, no dividend or distribution will be declared or paid on shares of our common stock, and no common stock will be purchased, redeemed or otherwise acquired for consideration by us or any of our subsidiaries unless, in each case, all accumulated and unpaid dividends for all preceding dividend periods have been declared and paid, or a sufficient amount of cash or number of shares of common stock has been set apart for the payment of such dividends, on all outstanding shares of MCPS. In the event of our voluntary or involuntary liquidation, winding-up or dissolution, no distribution of our assets may be made to holders of our common stock until we have paid holders of MCPS, each of which will be entitled to receive a liquidation preference in the amount of $100 per share plus accumulated and unpaid dividends.

Unless earlier converted or redeemed, each share of MCPS will automatically convert, for settlement on or about October 15, 2024, into between 0.4413 and 0.5405 shares of Common Stock, subject to customary anti-dilution adjustments. The conversion rate that will apply to mandatory conversions will be determined based on the average of the daily volume-weighted average prices over the 20 consecutive trading days beginning on, and including, the 21st scheduled trading day immediately before October 15, 2024. The conversion rate applicable to mandatory conversions may in certain circumstances be increased to compensate holders of the MCPS for certain unpaid accumulated dividends.

~~Common Stock~~

We are authorized to issue 60,000,000 shares of common stock, $0.01 par value per share. Holders of common stock are entitled to one vote per share. Holders of common stock are entitled to receive dividends, if and when declared by our Board of Directors, and to share ratably in our assets legally available for distribution to our stockholders in the event of liquidation. Holders of common stock have no preemptive, subscription, redemption, or conversion rights. The holders of common stock do not have cumulative voting rights. The holders of a majority of the shares of common stock can elect all of the directors and can control our management and affairs. The common stock is junior to the MCPS in terms of liquidation preference.

On September 24, 2021, we completed an offering of 3,450,000 shares of common stock in a public offering registered under the Securities Act at an offering price of $185 per share, including 450,000 shares issued pursuant to the full exercise of the option granted to the underwriters of the offering to purchase additional shares.

The net proceeds from the offering were approximately $605,677 after deducting underwriting discounts and commissions and offering expenses. On November 1, 2021, the Company used the proceeds to fund a portion of the cash purchase price for the acquisition of Dodge.

6. Net ~~Income~~Income/(Loss) Per Share Available to Common Stockholders

Basic net ~~income~~income/(loss) per share available to common stockholders is computed by dividing net ~~income~~income/(loss) available to common stockholders by the weighted-average number of common shares outstanding.

Diluted net ~~income~~income/(loss) per share available to common stockholders is computed by dividing net ~~income~~income/(loss) available to common stockholders by the sum of the weighted-average number of common shares and dilutive common share equivalents then outstanding using the treasury stock method. Common share equivalents consist of the incremental common shares issuable upon the exercise of stock options and the conversion of 5.00% Series A Mandatory Convertible Preferred Stock (“MCPS”) to common ~~stock shares of MCPS.~~shares. The MCPS was issued on September 24, 2021.

We exclude outstanding stock options, stock awards and the MCPS from the calculations if the effect would be anti-dilutive. The dilutive effect of the MCPS is calculated using the if-converted method. The if-converted method assumes that these securities were converted to shares of common stock at the later of the September 24, 2021 issuance date or the beginning of the reporting period to the extent that the effect is dilutive. If the effect is anti-dilutive, we calculate net ~~income~~income/(loss) per share available to common stockholders by adjusting net ~~income~~income/(loss) in the numerator for the effect of the cumulative MCPS dividends for the respective period.

For the three- and six-month periods ended October ~~2, 2021,~~1, 2022, the effect of assuming the conversion of the 4,600,000 shares of MCPS into shares of common stock was anti-dilutive, and therefore excluded from the calculation of diluted earnings per share available to common stockholders. Accordingly, net ~~income~~income/(loss) was reduced by cumulative MCPS dividends, as presented in our consolidated statement of operations, for purposes of calculating net ~~income~~income/(loss) available to common stockholders.

For the three months ended October ~~2, 2021, 159,925~~1, 2022, 90,796 employee stock options and 485 restricted shares were excluded from the calculation of diluted earnings per share available to common stockholders. For the six months ended October 1, 2022, 110,692 employee stock options and 9,780 restricted shares were excluded from the calculation of diluted earnings per share available to common stockholders. The inclusion of these employee stock options and restricted shares would have been anti-dilutive.

For the three months ended October 2, 2021, no employee stock options or restricted shares were excluded from the calculation of diluted earnings per share available to common stockholders. For the six months ended October 2, 2021, 159,925 employee stock options and no restricted shares were excluded from the calculation of diluted earnings per share available to common stockholders. For the three months ended September 26, 2020, 502,861 employee stock options and 115,185 restricted shares were excluded from the calculation of diluted earnings per share available to common stockholders. For the six months ended September 26, 2020, 502,909 employee stock options and 65,325 restricted shares were excluded from the calculation of diluted earnings per share available to common stockholders. The inclusion of these employee stock options ~~and restricted shares~~ would have been anti-dilutive.

The table below reflects the calculation of weighted-average shares outstanding for each period presented as well as the computation of basic and diluted net ~~income~~income/(loss) per share available to common ~~stockholders:~~stockholders.

Three Months Ended Six Months Ended

October 2,
2021

September 26,
2020

October 2,
2021

September 26,
2020

Net income $ 6,929 $ 20,421 $ 32,928 $ 43,110
Preferred stock dividends 510 — 510 —
Net income available to common stockholders $ 6,419 $ 20,421 $ 32,418 $ 43,110

Denominator for basic net income per share available to common stockholders — weighted-average shares outstanding 25,500,393 24,823,658 25,260,728 24,793,245

Effect of dilution due to employee stock awards 275,401 133,500 283,360 151,363
Effect of dilution due to MCPS — — — —
Denominator for diluted net income per share available to common stockholders — weighted-average shares outstanding 25,775,794 24,957,158 25,544,088 24,944,608

Basic net income per share available to common stockholders $ 0.25 $ 0.82 $ 1.28 $ 1.74

Diluted net income per share available to common stockholders $ 0.25 $ 0.82 $ 1.27 $ 1.73

	Three Months Ended					Six Months Ended
	October 1, 2022		October 2, 2021			October 1, 2022		October 2, 2021

Net income/(loss)	$	43,802	$	(1,352	)	$	81,240	$	22,686
Preferred stock dividends		5,750		510			11,500		510
Net income/(loss) available to common stockholders	$	38,052	$	(1,862	)	$	69,740	$	22,176

Denominator for basic net income/(loss) per share available to common stockholders — weighted-average shares outstanding		28,758,403		25,500,393			28,714,445		25,260,728

Effect of dilution due to employee stock awards		335,388		—			305,958		372,117
Denominator for diluted net income/(loss) per share available to common stockholders — weighted-average shares outstanding		29,093,791		25,500,393			29,020,403		25,632,845

Basic net income/(loss) per share available to common stockholders	$	1.32	$	(0.07	)	$	2.43	$	0.88

Diluted net income/(loss) per share available to common stockholders	$	1.31	$	(0.07	)	$	2.40	$	0.87

~~7. Cash~~6. Fair Value

Fair value is defined as the price that would be expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The FASB provides accounting rules that classify the inputs used to measure fair value into the following hierarchy:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 – Unobservable inputs for the asset or liability.

Financial assets and ~~Cash Equivalents~~liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

As a result of the occurrence of triggering events such as purchase accounting for acquisitions, the Company does measure certain assets and liabilities based on Level 3 inputs.

Financial Instruments:

The ~~Company considers all highly liquid investments purchased with an original maturity~~Company’s financial instruments consist primarily of ~~three months or less~~cash and cash equivalents, accounts receivable, trade accounts payable, short-term borrowings and long-term debt. Due to betheir short-term nature, the carrying value of cash ~~equivalents.~~and cash equivalents, accounts receivable, trade accounts payable, accrued expenses and short-term borrowings are a reasonable estimate of their fair value. Long-term assets held on our balance sheet related to benefit plan obligations are measured at fair value. Due to the nature of fair value calculations for variable-rate debt, the carrying value of the Company’s long-term variable-rate debt is a reasonable estimate of its fair value. The fair value of the Company’s long-term fixed-rate debt, based on quoted market prices, was $421,745 and $463,750 at October 1, 2022 and April 2, 2022, respectively. The carrying value of this debt was $492,822 at October 1, 2022 and $492,396 at April 2, 2022. The fair value of long-term fixed-rate debt was measured using Level 2 inputs. The Company ~~maintains~~does not believe it has significant concentrations of risk associated with the counterparties to its cash accounts primarily with Bank of America, N.A., Credit Suisse Group AG and Wells Fargo & Company. The domestic balances are insured by the Federal Deposit Insurance Company up to $250. The Company has not experienced any losses in such accounts.

During the second quarter of fiscal 2022, the Company sold all of its remaining short-term marketable securities to fund a portion of the cash purchase price for the acquisition of Dodge, to pay acquisition-related fees and expenses, and for other general corporate purposes. The resulting gain on sale was immaterial.financial instruments.

7. Inventory

Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out method, and are summarized below:

	October 2, 2021		April 3, 2021		October 1, 2022		April 2, 2022
Raw materials	$	57,493	$	57,764	$	118,612	$	112,651
Work in process		93,197		86,183		128,860		122,983
Finished goods		220,055		220,200		310,329		280,506
	$	370,745	$	364,147	$	557,801	$	516,140

~~9. Debt~~

8. Goodwill and Intangible Assets

~~The balances payable under all borrowing facilities are as follows:~~Goodwill

October 2,
2021

April 3,
2021

Revolver and term loan facilities $ 3,115 $ 11,657
Debt issuance costs (1,005 ) (1,216 )
Other 5,495 5,666
Total debt 7,605 16,107
Less: current portion 500 2,612
Long-term debt $ 7,105 $ 13,495

Goodwill balances, by segment, consist of the following:

	Aerospace/ Defense		Industrial			Total
April 2, 2022	$	194,124	$	1,707,980		$	1,902,104
Acquisition ⁽¹⁾		—		(22,912	)		(22,912	)
Translation adjustments		—		(6,503	)		(6,503	)
October 1, 2022	$	194,124	$	1,678,565		$	1,872,689

The current portion of long-term debt as of October 2, 2021 included the current portion of the Schaublin mortgage. The current portion of long-term debt as of April 3, 2021 included the current portion of the Foreign Term Loan and the Schaublin mortgage.

⁽¹⁾

Purchase accounting adjustments to goodwill associated with the acquisition of Dodge discussed further in Note 13.

Intangible Assets

			October 1, 2022				April 2, 2022
	Weighted Average Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Product approvals		24	$	50,878	$	17,645	$	50,878	$	16,680
Customer relationships and lists		24		1,293,729		80,225		1,294,577		53,376
Trade names		25		216,317		19,639		216,340		15,073
Distributor agreements		5		722		722		722		722
Patents and trademarks		16		13,017		6,878		12,342		6,607
Domain names		10		437		437		437		437
Other		5		14,469		3,288		9,720		4,887
				1,589,569		128,834		1,585,016		97,782
Non-amortizable repair station certifications		n/a		24,281		—		24,281		—
Total		24	$	1,613,850	$	128,834	$	1,609,297	$	97,782

Amortization expense for definite-lived intangible assets during the three-month periods ended October 1, 2022 and October 2, 2021 were $16,755 and $2,825, respectively. Amortization expense for definite-lived intangible assets during the six-month periods ended October 1, 2022 and October 2, 2021 were $34,059 and $5,409, respectively. These amounts are included in other, net on the Company’s consolidated statements of operations. Estimated amortization expense for the remainder of fiscal 2023 and the five succeeding fiscal years and thereafter is as follows:

Remainder of Fiscal 2023	$	34,307
Fiscal 2024		68,040
Fiscal 2025		67,926
Fiscal 2026		66,634
Fiscal 2027		65,591
Fiscal 2028		64,832
Fiscal 2029 and thereafter		1,093,405

9. Accrued Expenses and Other Current Liabilities

The significant components of accrued expenses and other current liabilities are as follows:

	October 1, 2022		April 2, 2022
Employee compensation and related benefits	$	35,982	$	34,697
Taxes		8,447		11,706
Contract liabilities		22,414		19,556
Accrued rebates		38,829		35,234
Workers’ compensation and insurance		1,067		1,144
Acquisition costs		2,487		4,568
Current finance lease liabilities		4,686		3,863
Accrued preferred stock dividends		4,919		4,919
Interest		10,685		10,987
Audit fees		464		599
Legal		925		450
Returns and warranties		8,409		7,889
Other		8,270		9,640
	$	147,584	$	145,252

10. Debt

Domestic Credit Facility

~~The Company’s credit agreement~~On November 1, 2021 RBC Bearings Incorporated, our top holding company, and our Roller Bearing Company of America, Inc. subsidiary (“RBCA”) entered into a Credit Agreement (the “New Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer and the other lenders party thereto, and terminated the Company’s prior Credit Agreement, which was entered into with Wells Fargo in 2015 (the “2015 Credit Agreement”). The New Credit Agreement provides the Company with (a) a ~~$250,000~~$1,300,000 term loan facility (the “Term Loan Facility”), which was used to fund a portion of the cash purchase price for the acquisition of Dodge and to pay related fees and expenses, and (b) a $500,000 revolving credit facility (the ~~“Revolver”~~“Revolving Credit Facility” and together with the Term Loan Facility, the “Facilities”)~~, which expires on January 31, 2024. As of October 2, 2021, $923 in unamortized debt~~. Debt issuance costs ~~remained.~~associated with the New Credit Agreement totaled $14,947 and will be amortized over the life of the New Credit Agreement.

Amounts outstanding under the ~~Revolver~~Facilities generally bear interest at either, at the Company’s option, (a) a base rate determined by reference to the higher of ~~(1)~~(i) Wells Fargo’s prime lending rate, ~~(2)~~(ii) the federal funds effective rate plus 1/2 of 1%1.00% and ~~(3)~~(iii) the one-month LIBOR rate plus ~~1%,~~1.00% or (b) the LIBOR rate plus a specified margin, depending on the type of borrowing being made. The applicable margin is based on the Company’s consolidated ratio of total net debt to consolidated EBITDA ~~at each measurement date. As of October 2, 2021,~~from time to time. Currently, the Company’s margin ~~was 0.00%~~is 0.50% for base rate loans and ~~0.75%~~1.50% for LIBOR rate loans. The Facilities are subject to a “LIBOR” floor of 0.00% and contain “hard-wired” LIBOR replacement provisions as set forth in the New Credit Agreement. As of October 1, 2022, the Company’s commitment fee rate is 0.20% and the letter of credit fee rate was 1.50%.

The ~~2015~~Term Loan Facility will mature on November 2, 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. The required future principal payments on the Term Loan Facility are $0 for the remainder of fiscal 2023, $0 for fiscal 2024, and $0 for fiscal 2025, due to prepayments previously made, and approximately $87,500 for fiscal 2026, and $942,500 for fiscal 2027. The Revolving Credit Facility will mature on November 2, 2026, at which time all amounts outstanding under the Revolving Credit Facility will be payable.

The New Credit Agreement requires the Company to comply with various covenants, including ~~among other things,~~the following financial covenants: (a) a ~~financial covenant to maintain~~maximum Total Net Leverage Ratio of 5.50:1.00, which maximum Total Net Leverage Ratio shall decrease during certain subsequent test periods as set forth in the New 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 ~~ratio~~period of ~~consolidated net~~12 months after the consummation of a material acquisition), and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of October 1, 2022, the Company was in compliance with all debt ~~to adjusted EBITDA not greater than 3.50 to 1.~~ covenants.

The ~~2015~~New Credit Agreement allows the Company to, among other things, make distributions to ~~shareholders,~~stockholders, repurchase its stock, incur other debt or liens, or acquire or dispose of assets provided that the Company complies with certain requirements and limitations of the ~~2015~~New Credit Agreement. ~~As of October 2, 2021, the Company was in compliance with all such covenants.~~

The Company’s domestic subsidiaries have guaranteed the Company’s obligations under the ~~2015~~New Credit Agreement, and the Company’s obligations and the domestic subsidiaries’ guaranty are secured by a pledge of substantially all of the domestic assets of the Company and its domestic subsidiaries.

As of October ~~2, 2021,~~1, 2022, $1,030,000 was outstanding under the Term Loan Facility and approximately ~~$3,550~~$3,675 of the ~~Revolver~~Revolving Credit Facility was being utilized to provide letters of credit to secure the Company’s obligations relating to certain insurance programs, and the Company had the ability to borrow up to an additional ~~$246,450~~$496,325 under the ~~Revolver as~~Revolving Credit Facility.

Senior Notes

On October 7, 2021, RBCA issued $500,000 aggregate principal amount of ~~October 2, 2021.~~4.375% Senior Notes due 2029 (the “Senior Notes”). The net proceeds from the issuance of the Senior Notes were approximately $491,992 after deducting initial purchasers’ discounts and commissions and offering expenses. On November 1, 2021, the ~~2015~~Company used the proceeds to fund a portion of the cash purchase price for the acquisition of Dodge.

The Senior Notes were issued pursuant to an indenture with Wilmington Trust, National Association, as trustee (the “Indenture”). 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.

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 New Credit ~~Agreement was terminated~~Agreement.

Interest on the Senior Notes accrues at a rate of 4.375% and ~~replaced with~~is payable semi–annually in cash in arrears on April 15 and October 15 of each year.

The Senior Notes will mature on October 15, 2029. The Company may redeem some or all of the ~~new credit agreement referred~~Senior Notes at any time on or after October 15, 2024 at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company may also redeem up to 40% of the Senior Notes using the proceeds of certain equity offerings completed before October 15, 2024, at a redemption price equal to 104.375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to October 15, 2024, the Company may redeem some or all of the Senior Notes at a price equal to 100% of the principal amount, plus a “make–whole” premium, 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 ~~Note 12 below.~~control, the Company must offer to purchase the Senior Notes.

Foreign Term Loan and Revolving Credit Facility

On August 15, 2019, one of our foreign subsidiaries, Schaublin SA (“Schaublin”), entered into two separate credit agreements (the “Foreign Credit Agreements”) with Credit Suisse (Switzerland) Ltd. to (i) finance the acquisition of Swiss Tool, and (ii) provide future working capital. The Foreign Credit Agreements provided Schaublin with a CHF 15,000 (approximately $15,383) term loan (the “Foreign Term Loan”), which ~~expires on July 31, 2024~~was extinguished in February 2022 and a CHF 15,000 (approximately $15,383) revolving credit facility (the “Foreign Revolver”), which ~~continues in effect until~~was terminated by either Schaublin or Credit Suisse. Debt issuance costs associated with the Foreign Credit Agreements totaled CHF 270 (approximately $277) and will be amortized throughout the life of the Foreign Credit Agreements. Asas of October ~~2, 2021, approximately $82 in unamortized debt issuance costs remain.~~1, 2022.

~~Amounts outstanding under~~A summary of the ~~Foreign Term Loan and~~Company’s debt is presented in the Foreign Revolver generally bear interest at LIBOR plus a specified margin. The applicable margin is based on Schaublin’s ratio of total net debt to consolidated EBITDA at each measurement date. Currently, Schaublin’s margin is 1.00%.table below:

The Foreign Credit Agreements require Schaublin to comply with various covenants, which are tested annually on March 31. These covenants include, among other things, a financial covenant to maintain a ratio of consolidated net debt to adjusted EBITDA not greater than 2.50 to 1 as of March 31, 2021 and thereafter. Schaublin is also required to maintain an economic equity of CHF 20,000 at all times. The Foreign Credit Agreements allow Schaublin to, among other things, incur other debt or liens and acquire or dispose of assets provided that Schaublin complies with certain requirements and limitations of the Foreign Credit Agreements. As of October 2, 2021, Schaublin was in compliance with all such covenants.

	October 1, 2022			April 2, 2022
Revolver and term loan facilities	$	1,030,000		$	1,200,000
Senior notes		500,000			500,000
Debt issuance costs		(16,557	)		(20,895	)
Other		8,671			9,236
Total debt		1,522,114			1,688,341
Less: current portion		1,512			1,543
Long-term debt	$	1,520,602		$	1,686,798

Schaublin’s parent company, Schaublin Holding, has guaranteed Schaublin’s obligations under the Foreign Credit Agreements. Schaublin Holding’s guaranty and the Foreign Credit Agreements are secured by a pledge of the capital stock of Schaublin. In addition, the Foreign Term Loan is secured with pledges of the capital stock of the top company and the three operating companies in the Swiss Tool System group of companies.

As of October 2, 2021, there was approximately $3,115 outstanding under the Foreign Term Loan and no amounts outstanding under the Foreign Revolver, and Schaublin had the ability to borrow up to an additional $16,114 under the Foreign Revolver.

~~Schaublin’s required future principal payments are approximately $0 for the remainder of fiscal 2022, $0 for fiscal 2023 through fiscal 2024 and $3,115 for fiscal 2025.~~

~~Other Notes Payable~~

In 2012 Schaublin purchased the land and building that it occupies for approximately $14,910. Schaublin obtained a 20-year fixed-rate mortgage of approximately $9,857 at an interest rate of 2.9%. The balance of the purchase price of approximately $5,053 was paid from cash on hand. The balance on this mortgage as of October 2, 2021 was approximately $5,495 and has been classified as Level 2 of the valuation hierarchy.

~~The Company’s required future principal payments are approximately $250 for the remainder of fiscal 2022, $500 for each year from fiscal 2023 through fiscal 2026 and $3,245 thereafter.~~

~~10.~~11. Income Taxes

The Company files income tax returns in numerous U.S. and foreign jurisdictions, with returns subject to examination for varying periods, but generally back to and including the year ending ~~April 2, 2005.~~March 30, 2019, although certain tax credits generated in earlier years are open under statute from March 29, 2008. The Company is no longer subject to U.S. federal tax examination by the Internal Revenue Service for years ending before March ~~31, 2018.~~30, 2019.

The effective income tax rates for the three-month periods ended October 1, 2022 and October 2, 2021, were 18.1% and ~~September 26, 2020 were 40.5% and 20.9%~~223.5%, respectively. In addition to discrete items, the effective income tax rates for these periods are different from the U.S. statutory rates due to the foreign-derived intangible income provision and U.S. credit for increasing research activities, which decrease the rate, and state income taxes, ~~which~~foreign income taxes, and nondeductible stock-based compensation, that increase the rate.

The effective income tax rate for the three-month period ended October 1, 2022 of 18.1% includes $2,372 of tax benefits associated with share-based compensation and $174 of other items. The effective income tax rate without discrete items for the three-month period ended October 1, 2022 would have been 22.9%. The effective income tax rate for the three-month period ended October 2, 2021 of ~~40.5%~~223.5% includes $91 of tax benefits associated with share-based compensation offset by the establishment of a $1,853 valuation allowance for capital loss carryforwards we do not expect to recognize and $100 of other items. The effective income tax rate without discrete items for the three-month period ended October 2, 2021 would have been 24.5%. The effective income tax rate for the three-month period ended September 26, 2020 of 20.9% includes $364 of tax benefits associated with share-based compensation. The effective income tax rate without discrete items for the three-month period ended September 26, 2020 would have been 22.0%53.5%. The Company believes it is reasonably possible that some of its unrecognized tax positions may be effectively settled within the next ~~twelve~~12 months due to the closing of audits and the statute of limitations expiring in varying jurisdictions. The decrease in the Company’s unrecognized tax positions, pertaining primarily to federal and state credits and state tax, is estimated to be approximately ~~$1,429.~~$3,068.

Income tax expense for the six-month period ended October ~~2, 2021~~1, 2022 was ~~$9,585~~$20,165 compared to ~~$11,046~~$7,868 for the six-month period ended ~~September 26, 2020.~~October 2, 2021. Our effective income tax rate for the six-month period ended October ~~2, 2021~~1, 2022 was ~~22.5%~~19.9% compared to ~~20.4%~~25.8% for the six-month period ended ~~September 26, 2020.~~October 2, 2021. The effective income tax rate for the six-month period ended October 1, 2022 of 19.9% includes $2,971 of tax benefits associated with share-based compensation partially offset by $187 of other items. The effective income tax rate without these benefits and other items for the six-month period ended October 1, 2022 would have been 23.0%. The effective income tax rate for the six-month period ended October 2, 2021 of ~~22.5%~~25.8% includes $2,231 of tax benefits associated with share-based compensation ~~and $60 of other items~~ offset by the establishment of a $1,853 valuation allowance for capital loss carryforwards we don’t expect to ~~recognize.~~recognize and $60 of other items. The effective income tax rate without these benefits and other items for the six-month period ended October 2, 2021 would have been 23.6%. The effective income tax rate for the six-month period ended September 26, 2020 of 20.4% included $679 of tax benefits associated with share-based compensation. The effective income tax rate without these benefits and other items for the six-month period ended September 26, 2020 would have been 21.6%27.2%.

~~11.~~12. Reportable Segments

The Company operates through operating segments ~~for which separate~~and reports its financial ~~information is available, and for which operating~~ results ~~are evaluated regularly by the Company’s~~based on how its chief operating decision maker ~~in determining resource allocation~~makes operating decisions, assesses the performance of the business, and ~~assessing performance. Those~~allocates resources. These reportable operating segments are ~~aggregated as reportable segments as they have similar economic characteristics, including nature of the products~~Aerospace/Defense and ~~production processes, distribution patterns~~Industrial and ~~classes of customers.~~

~~The Company has 4 reportable business segments, Plain Bearings, Roller Bearings, Ball Bearings and Engineered Products, which~~ are described below.

~~Plain Bearings.~~Aerospace/Defense. ~~Plain bearings are produced with either self-lubricating or metal-to-metal designs and consists of several sub-classes, including rod~~This segment represents the end ~~bearings, spherical plain~~markets for the Company’s highly engineered bearings and ~~journal bearings. Unlike ball bearings, which are~~precision components used in ~~high-speed rotational applications, plain bearings are primarily used to rectify inevitable misalignments in various mechanical components.~~

~~Roller Bearings.~~ Roller bearings are anti-friction bearings that use rollers instead of balls. The Company manufactures four basic types of roller bearings: heavy-duty needle roller bearings with inner rings, tapered roller bearings, track rollerscommercial aerospace, defense aerospace, and ~~aircraft roller bearings.~~

~~Ball Bearings.~~ ~~The Company manufactures four basic types of ball bearings: high precision aerospace, airframe control, thin section~~sea and ~~commercial ball bearings, which are used in high-speed rotational~~ground defense applications.

~~Engineered Products.~~ Industrial.~~Engineered Products consists of~~ This segment represents the end markets for the Company’s highly engineered ~~hydraulics, fasteners, collets~~bearings and precision components used in ~~aerospace, marine~~various industrial applications including: power transmission; construction, mining, energy and ~~industrial applications.~~specialized equipment manufacturing; semiconductor production equipment manufacturing; agricultural machinery, commercial truck and automotive manufacturing; and tool holding.

Segment performance is evaluated based on segment net sales and gross margin. Items not allocated to segment operating income include corporate administrative expenses and certain other amounts. Identifiable assets by reportable segment consist of those directly identified with the segment’s operations.

Three Months Ended Six Months Ended

October 2,
2021

September 26,
2020

October 2,
2021

September 26,
2020

Net External Sales
Plain $ 74,079 $ 71,053 $ 147,400 $ 149,928
Roller 27,309 21,579 52,556 44,479
Ball 24,431 21,099 47,559 39,939
Engineered Products 35,081 32,604 69,590 68,482
$ 160,900 $ 146,335 $ 317,105 $ 302,828
Gross Margin
Plain $ 27,956 $ 29,750 $ 59,480 $ 61,827
Roller 10,128 6,236 19,246 14,643
Ball 11,090 9,129 21,782 17,056
Engineered Products 13,290 11,481 25,729 22,523
$ 62,464 $ 56,596 $ 126,237 $ 116,049
Selling, General & Administrative Expenses
Plain $ 5,948 $ 5,276 $ 11,833 $ 10,547
Roller 1,465 1,162 2,823 2,401
Ball 1,610 1,289 3,251 2,635
Engineered Products 4,226 3,838 8,475 7,650
Corporate 16,425 14,458 33,094 29,619
$ 29,674 $ 26,023 $ 59,476 $ 52,852
Operating Income
Plain $ 20,213 $ 23,472 $ 45,043 $ 48,873
Roller 8,662 4,481 15,955 11,580
Ball 9,457 7,803 18,473 14,354
Engineered Products 7,849 6,112 15,452 12,093
Corporate (19,058 ) (15,505 ) (37,077 ) (31,723 )
$ 27,123 $ 26,363 $ 57,846 $ 55,177
Intersegment Sales
Plain $ 1,687 $ 1,212 $ 3,254 $ 2,774
Roller 2,552 2,171 4,806 5,549
Ball 1,318 464 2,335 1,131
Engineered Products 12,955 6,832 23,437 17,481
$ 18,512 $ 10,679 $ 33,832 $ 26,935

~~All intersegment sales are eliminated in consolidation.~~

~~12. Subsequent Events~~

	Three Months Ended						Six Months Ended
	October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Net External Sales
Aerospace/Defense	$	103,548		$	92,915		$	202,947		$	183,280
Industrial		265,619			67,985			520,300			133,825
	$	369,167		$	160,900		$	723,247		$	317,105
Gross Margin
Aerospace/Defense	$	41,033		$	36,580		$	79,633		$	75,212
Industrial		110,114			25,884			212,666			51,025
	$	151,147		$	62,464		$	292,299		$	126,237
Selling, General & Administrative Expenses
Aerospace/Defense	$	7,472		$	7,287		$	14,940		$	14,535
Industrial		30,101			5,918			60,073			11,665
Corporate		19,946			27,018			38,334			45,235
	$	57,519		$	40,223		$	113,347		$	71,435
Operating Income
Aerospace/Defense	$	31,480		$	26,521		$	60,984		$	56,111
Industrial		60,050			19,813			113,345			39,199
Corporate		(19,513	)		(29,760	)		(37,842	)		(49,423	)
	$	72,017		$	16,574		$	136,487		$	45,887


	October 1, 2022		April 2, 2022
Total Assets
Aerospace/Defense	$	789,204	$	776,505
Industrial		3,824,386		3,920,957
Corporate		113,470		147,955
	$	4,727,060	$	4,845,417

13. Dodge Acquisition

On November 1, 2021, the Company completed the acquisition of Dodge for approximately ~~$2,900,000,~~$2,908,241, net of cash acquired and subject to certain adjustments. The purchase price was paid with (i) $1,285,761 of borrowing under the Term Loan Facility, net of issuance costs, (ii) $1,050,811 of net proceeds from common stock and MCPS offerings, (iii) $494,200 of net proceeds from the Senior Notes offering, and (iv) approximately $77,469 of cash on hand. Since the close of the transaction, purchase price adjustments totaling $22,966 have been recorded.

In the acquisition, the Company purchased 100% of the capital stock of certain entities, including Dodge Mechanical Power Transmission Company Inc. (now known as Dodge Industrial, Inc.), and certain other assets relating to ~~ABB’s~~ABB Asea Brown Boveri Ltd.’s mechanical power transmission business.

With ~~headquarters~~offices in Greenville, South Carolina, Dodge is a leading manufacturer of mounted bearings, gearings and mechanical products with market-leading brand recognition. Dodge manufactures a complete line of mounted bearings, enclosed gearing and power transmission components across a diverse set of industrial end markets. Dodge primarily operates across the construction and mining aftermarket, and the food & beverage, warehousing and general machinery verticals, with sales predominately in the Americas.

When the Company entered into the Dodge acquisition agreement in July 2021, its obligation to pay the purchase price was supported by a $2,800,000 bridge financing commitment, which was replaced prior to the closing of the acquisition by the equity offerings described in Note 5 above and the debt financings described below. The remainder of the purchase price was funded with cash on hand.

On October 7, 2021, Roller Bearing Company of America, Inc. (“RBCA”), a wholly-owned subsidiary of our top holding company RBC Bearings Incorporated, issued $500,000 aggregate principal amount of 4.375% Senior Notes due 2029 (the “Notes”). The Notes were offered and sold only to “qualified institutional buyers” in the United States pursuant to Rule 144A of the Securities Act, and outside the United States to persons other than “U.S. persons” in compliance with Regulation S under the Securities Act.

On November 1, 2021 RBC Bearings and RBCA entered into a Credit Agreement (the “New Credit Agreement”) with Wells Fargo, as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer and the other lenders party thereto, and terminated the 2015 Credit Agreement. The New Credit Agreement provides the Company with (a) a $1,300,000 term loan facility (the “Term Loan Facility”), which was used to fund a portion of the cash purchase price for the acquisition of Dodge and to pay related fees and expenses, and (b) a $500,000 revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Facilities”), approximately $3,550 of which is being utilized to provide letters of credit to secure the Company’s obligations relating to certain insurance programs, leaving the Company with the ability to borrow up to an additional $496,450 under the Revolving Credit Facility as of November 1, 2021. Amounts outstanding under the Facilities generally bear interest at either, at RBCA’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 1/2 of 1.00% and (iii) the one-month LIBOR rate plus 1.00% or (b) the LIBOR rate plus a specified margin, depending on the type of borrowing being made. The applicable margin is based on the Company’s consolidated ratio of total net debt to consolidated EBITDA from time to time. Currently, the Company’s margin is 0.75% for base rate loans and 1.75% for LIBOR rate loans. The Facilities are subject to a “LIBOR” floor of 0.00% and contain “hard-wired” LIBOR replacement provisions as set forth in the New Credit Agreement. The Term Loan Facility and the Revolving Credit Facility will mature on November 2, 2026 (the “Maturity Date”). The Company can elect to prepay some or all of the outstanding balance from time to time without penalty. Commencing one full fiscal quarter after the execution of the New Credit Agreement, the Term Loan Facility will amortize in quarterly installments as set forth below with the balance payable on the Maturity Date unless otherwise extended in accordance with the terms of the Term Loan Facility:

~~Date~~	Term Loan Facility Repayment Amount
~~March 31, 2022~~		~~1.25~~	%
~~June 30, 2022~~		~~1.25~~	%
~~September 30, 2022~~		~~1.25~~	%
~~December 31, 2022~~		~~1.25~~	%
~~March 31, 2023~~		~~1.25~~	%
~~June 30, 2023~~		~~1.25~~	%
~~September 30, 2023~~		~~1.25~~	%
~~December 31, 2023~~		~~1.25~~	%
~~March 31, 2024~~		~~1.875~~	%
~~June 30, 2024~~		~~1.875~~	%
~~September 30, 2024~~		~~1.875~~	%
~~December 31, 2024~~		~~1.875~~	%
~~March 31, 2025~~		~~2.50~~	%
~~June 30, 2025~~		~~2.50~~	%
~~September 30, 2025~~		~~2.50~~	%
~~December 31, 2025~~		~~2.50~~	%
~~March 31, 2026~~		~~3.125~~	%
~~June 30, 2026~~		~~3.125~~	%
~~September 30, 2026~~		~~3.125~~	%
~~November 2, 2026~~		~~Remaining outstanding amounts~~

~~At November 1, 2021, the Company had $1,300,000 outstanding under the Term Loan Facility and $0 had been drawn down from the Revolving Credit Facility.~~

The New Credit Agreement requires the Company to comply with various covenants, including the following financial covenants beginning with the test period ending December 31, 2021: (a) a maximum Total Net Leverage Ratio of 5.50:1.00, which maximum Total Net Leverage Ratio shall decrease during certain subsequent test periods as set forth in the New 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 Borrower 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.

The New Credit Agreement allows the Company to, among other things, make distributions to shareholders, repurchase its stock, incur other debt or liens, or acquire or dispose of assets provided that the Company complies with certain requirements and limitations of the New Credit Agreement.

The Company is currently performing procedures to determine the Dodge purchase price allocation and estimating the fair value of tangible and intangible assets acquired and liabilities assumed in connection with the Dodge acquisition. The initial fair value estimates will be recorded in the third quarter of fiscal 2022.

Acquisition ~~and financing~~ costs incurred infor the ~~second quarter of~~ fiscal year ended April 2, 2022 totaled ~~$80,762. Of this amount, (a) $47,121 was recorded as a reduction of additional paid in capital on the consolidated balance sheets in connection with the common stock~~$22,598 and MCPS offerings, (b) $22,294 was recorded as deferred financing fees associated with a bridge loan financing commitment obtained in connection with the Dodge acquisition and included within prepaid expenses and other current assets on the consolidated balance sheets, of which, $15,470 was amortized during the quarter and included within interest expense in the consolidated statement of operations, (c) $9,913 was recorded as deferred financing fees associated with the permanent financing for the Dodge acquisition and included within other assets on the consolidated balance sheets, and (d) $1,433 waswere recorded as period expenses and included within other, net within the consolidated statements of operations. Remaining acquisition-related costs incurred for the three and six months ended October 1, 2022 were immaterial. This acquisition was accounted for as a purchase transaction. The purchase price allocation will be completed during the third quarter of fiscal 2023 as we finalize the impact from taxes and other minor items. The assets acquired and liabilities assumed were recorded based on their fair values at the date of acquisition as follows:

	November 1, 2021
Cash and cash equivalents	$	81,868
Accounts receivable		83,533
Inventory		136,376
Prepaid expenses and other current assets		1,261
Property, plant and equipment		165,109
Operating lease assets		9,768
Goodwill		1,601,881
Other intangible assets		1,385,082
Other noncurrent assets		3,672
Accounts payable		(69,757	)
Accrued rebates		(30,184	)
Accrued expenses and other current liabilities		(44,766	)
Deferred tax liabilities		(299,711	)
Other noncurrent liabilities		(56,989	)
Net assets acquired		2,967,143
Less cash received		81,868
Net consideration	$	2,885,275

The goodwill associated with this acquisition is the result of expected synergies from combining the operations of the acquired business with the Company's operations, and intangible assets that do not qualify for separate recognition, such as an assembled workforce. $44,941 of the acquired goodwill is deductible for tax purposes.

The fair value of the identifiable intangible assets of $1,385,082, consisting primarily of customer relationships and trade names, was determined using the income approach. Specifically, a multi-period, excess earnings method was utilized for the customer relationships and the relief-from-royalty method was utilized for the trade name. The fair value of the customer relationships, $1,185,000, is being amortized based on the economic pattern of benefit over a period of 24 years; the fair value of the trade names, $200,000, is being amortized on a straight-line basis over a 26-year term. These amortization periods represent the estimated useful lives of the assets.

The results of operations for Dodge have been included in the Company’s financial statements for the period subsequent to the completion of the acquisition on November 1, 2021. Dodge contributed $192,267 of revenue and $38,152 of operating income for the three months ended October 1, 2022. Dodge contributed $369,740 of revenue and $68,646 of operating income for the six months ended October 1, 2022.

Upon closing, the Company entered into a transition services agreement ("TSA") with ABB, pursuant to which ABB agreed to support the information technology, human resources and benefits, finance, tax and treasury functions of the Dodge business for six to 12 months. Substantially all services terminated on November 1, 2022. Costs associated with the TSA were $3,999 and $7,704 for the three and six months ended October 1, 2022, respectively, and are included in other, net on the Company’s consolidated statement of operations. Since the purchase of the Dodge business on November 1, 2021, costs associated with the TSA were $15,707 through October 1, 2022.

14. Subsequent Events

On October 28, 2022, the Company entered into a three-year USD-denominated interest rate swap (“the Swap”) from a third-party financial counterparty under the New Credit Agreement (see Note 10). The Swap was executed to protect the Company from interest rate volatility on our variable-rate Term Loan Facility. The Swap has an effective date of December 30, 2022 and is comprised of a $600,000 notional with a maturity of three years. RBC will receive a variable rate based on one-month USD-SOFR CME Term and will pay a fixed rate of 4.455%. The notional on the Swap will amortize as follows:

Year 1: $600,000

Year 2: $400,000

Year 3: $100,000

~~ITEM~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement as to Forward-Looking Information

The objective of the discussion and analysis is to provide material information relevant to an assessment of the financial condition and results of operations of the registrant including an evaluation of the amounts and certainty of cash flows from operations and from outside sources.

The information in this discussion contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, included in this quarterly report on Form 10-Q regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management are “forward-looking statements” as the term is defined in the Private Securities Litigation Reform Act of 1995.

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) our results have been and are likely to continue to be impacted by the COVID-19 pandemic; (d) 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; (e) future reductions or changes in U.S. government spending could negatively affect our business; (f) 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; (g) 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; (h) 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; (i) the retirement of commercial aircraft could reduce our revenues, cash flows and profitability; (j) work stoppages and other labor problems could materially reduce our ability to operate our business; (k) unexpected equipment failures, catastrophic events or capacity constraints could increase our costs and reduce our sales due to production curtailments or shutdowns; (l) we may not be able to continue to make the acquisitions necessary for us to realize our growth strategy; (m) 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; (n) 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; (o) we depend heavily on our senior management and other key personnel, the loss of whom could materially affect our financial performance and prospects; (p) our international operations are subject to risks inherent in such activities; (q) currency translation risks may have a material impact on our results of operations; (r) we are subject to changes in legislative, regulatory and legal developments involving income and other taxes; (s) we may be required to make significant future contributions to our pension plan; (t) we may incur material losses for product liability and recall-related claims; (u) environmental and health and safety laws and regulations impose substantial costs and limitations on our operations, and environmental compliance may be more costly than we expect; (v) our intellectual property and proprietary information are valuable, and any inability to protect them could adversely affect our business and results of operations; in addition, we may be subject to infringement claims by third parties; (w) cancellation of orders in our backlog could negatively impact our revenues, cash flows and profitability; (x) if we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud; (y) litigation could adversely affect our financial condition; (z) changes in accounting standards or changes in the interpretations of existing standards could affect our financial results; (aa) risks associated with utilizing information technology systems could adversely affect our operations; (bb) our quarterly performance can be affected by the timing of government product inspections and approvals; (cc) we may not be able to efficiently integrate Dodge into our operations; ~~and~~ (dd) we may fail to realize some or all of the anticipated benefits of the Dodge acquisition or those benefits may take longer to realize than expected; (ee) we incurred substantial debt in order to complete the Dodge acquisition, which could constrain our business and exposes us to the risk of defaults under our debt instruments; and (ff) increases in interest rates would increase the cost of servicing the Term Loan Facility and could reduce our profitability. Additional information regarding these and other risks and uncertainties is contained in our periodic filings with the SEC, including, without limitation, the risks identified under the heading “Risk Factors” set forth in the Annual Report on Form ~~10-K~~10-K/A for the year ended April ~~3, 2021.~~2, 2022. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. We do not intend, and undertake no obligation, to update or alter any forward-looking statement. The following section is qualified in its entirety by the more detailed information, including our financial statements and the notes thereto, which appears elsewhere in this Quarterly Report.

Overview

We are a well-known international manufacturer and maker of highly engineered ~~precision~~ bearings and precision components. 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 ~~unique~~ expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete. With 4256 facilities in 710 countries, of which 3037 are manufacturing facilities, we have been able to significantly broaden our end markets, products, customer base and geographic reach. ~~We currently operate~~

Previously we operated under four reportable business ~~segments:~~segments – Plain Bearings, Roller Bearings, Ball Bearings, and Engineered ~~Products. The following further describes these~~Products – but the Dodge acquisition has resulted in a change in the internal organization of the Company and how our chief operating decision maker makes operating decisions, assesses the performance of the business, and allocates resources so that we now operate under two reportable ~~segments:~~business segments – Aerospace/Defense and Industrial:

●

Aerospace/Defense. This segment represents the end markets for the Company’s highly engineered bearings and precision components used in commercial aerospace, defense aerospace, and marine and ground defense applications.

●

Industrial. This segment represents the end markets for the Company’s highly engineered bearings, gearings and precision components used in various industrial applications including: power transmission; construction, mining, energy and specialized equipment manufacturing; semiconductor production equipment manufacturing; agricultural machinery, commercial truck and automotive manufacturing; and tool holding.

~~Plain Bearings.~~ Plain bearings are produced with either self-lubricating or metal-to-metal designs and consists of several sub-classes, including rod end bearings, spherical plain bearings and journal bearings. Unlike ball bearings, which are used in high-speed rotational applications, plain bearings are primarily usedFinancial information for fiscal 2022 has been recast to ~~rectify inevitable misalignments in various mechanical components.~~

~~Roller Bearings.~~ Roller bearings are anti-friction bearings that use rollers instead of balls. We manufacture four basic types of roller bearings: heavy-duty needle roller bearings with inner rings, tapered roller bearings, track rollers and aircraft roller bearings.

~~Ball Bearings~~~~. We manufacture four basic types of ball bearings: high precision aerospace, airframe control, thin section and commercial ball bearings, which are used in high-speed rotational applications.~~

~~Engineered Products.~~ ~~Engineered Products consist of highly engineered hydraulics, fasteners, collets, tool holders and precision components used in aerospace, marine and industrial applications.~~conform to the new segment presentation.

Purchasers of bearings and engineered products include industrial equipment and machinery manufacturers, producers of commercial and military aerospace equipment, agricultural machinery manufacturers, construction, energy, mining and specialized equipment manufacturers, and marine products, automotive and commercial truck manufacturers. The markets for our products are cyclical, and we have endeavored to mitigate this cyclicality by entering into single and sole-source relationships and long-term purchase agreements, through diversification across multiple market segments within the ~~aerospace~~Aerospace/Defense and ~~industrial~~Industrial segments, by increasing sales to the aftermarket, and by focusing on developing highly customized solutions.

Currently, our strategy is built around maintaining our role as a leading manufacturer of ~~precision-engineered~~highly engineered bearings and precision components through the following efforts:

●

Developing innovative solutions. By leveraging our design and manufacturing expertise and our extensive customer relationships, we continue to develop new products for markets in which there are substantial growth opportunities.

●

Expanding customer base and penetrating end markets. We continually seek opportunities to access new customers, geographic locations and bearing platforms with existing products or profitable new product opportunities.

●

Increasing aftermarket sales. We believe that increasing our aftermarket sales of replacement parts will further enhance the continuity and predictability of our revenues and enhance our profitability. Such sales include sales to third party distributors and sales to OEMs for replacement products and aftermarket services. The acquisition of Dodge has had a profound impact on our sales volumes to distributors and other aftermarket customers. We will further increase the percentage of our revenues derived from the replacement market by continuing to implement several initiatives.

●

Pursuing selective acquisitions. The acquisition of businesses that complement or expand our operations has been and continues to be an important element of our business strategy. We believe that there will continue to be consolidation within the industry that may present us with acquisition opportunities.

Outlook

Our net sales for the three-month period ended October ~~2, 2021~~1, 2022 increased ~~10.0%~~129.4% compared to the same period last fiscal ~~year.~~year; excluding Dodge sales in the second quarter of fiscal 2023, net sales were up 9.9% period over period. The increase in net sales was a result of a ~~31.1%~~290.7% increase in our ~~industrial markets offset by a 4.4% decrease~~Industrial segment and 11.4% increase in our ~~aerospace markets. The increase in industrial~~Aerospace/Defense segment. Excluding sales ~~was driven by increases in the mining, energy, marine and general industrial markets. The decrease in aerospace sales was experienced primarily in~~from Dodge, our ~~commercial OEM markets.~~Industrial segment increased 7.9% year over year. Our backlog, as of October ~~2, 2021,~~1, 2022, was ~~$456.7~~$653.2 million compared to ~~$394.8~~$603.1 million as of April ~~3, 2021.~~2, 2022.

~~Our sales~~

We are continuing to ~~industrial markets experienced growth~~see the recovery of ~~31.1% in~~ the ~~second quarter of fiscal 2022 as compared to~~commercial aerospace business, which increased by 31.3% for the ~~same~~ three-month period ~~last year. This continued~~ended October 1, 2022 versus the ~~growth we experienced in the first quarter of fiscal 2022. Sales to industrial markets were up 31.0% as compared to the~~ same ~~six-month~~ period last year. We anticipate this recovery to continue throughout the rest of the fiscal year and beyond. Orders have ~~experienced growth across most~~continued to grow as evidenced by our backlog. Defense sales, which represented approximately 32.3% of ~~our industrial products both~~segment sales during the quarter, were down 15.3% year over year. This is in part due to ~~OEM and distribution customers.~~ the timing of delivery on parts that require government approval and/or completion of certain milestone achievements prior to invoicing.

The ~~general economic environment, both domestic and international, has led to sustained strength~~increase in our industrial ~~order book~~sales reflects a pattern of sustained growth over the last year, with strong results in several areas. Our oil and gas business during the quarter continued a pattern of growth which ~~we expect~~is expected to continue ~~through the remainder of fiscal 2022.~~into future periods. Other notable strengths in industrial were in semiconductor and general industrial markets.

The COVID-19 health crisis continues to impact our commercial aerospace sales in fiscal 2022 as a result of build rate changes within the industry. The commercial aerospace OEM market and aftermarket have been impacted by reduced air travel and changes in production rates but are expected to improve in the fourth quarter of the fiscal year.

On November 1, 2021, subsequent to the end of the quarter, RBC completed the acquisition of Dodge. The results of this business will be reflected in our results starting in the third quarter of fiscal 2022. Dodge operates in the industrial market, with a significant amount of their sales directed to customers in industrial distribution. Including the positive impact of this acquisition, the Company expects net sales to be approximately ~~$245.0~~$348.0 million to ~~$255.0~~$360.0 million in the third quarter of fiscal ~~2022.~~2023.

We experienced strong cash flow generation during the second quarter of fiscal ~~2022~~2023 (as discussed in the section “Liquidity and Capital Resources” below). ~~With the addition of Dodge, we~~We expect this trend to continue throughout the fiscal year as customer demand continues to be significant. We believe that operating cash flows and available credit under the Revolving Credit Facility ~~and Foreign Revolver~~ will provide adequate resources to fund internal growth initiatives for the foreseeable future, including at least the next 12 months. ~~For further discussion regarding the funding of the Dodge acquisition, refer to Part I, Item 1 – Notes 5 and 12.~~ As of October ~~2, 2021,~~1, 2022, we had cash and cash equivalents of ~~$1,348.6~~$88.5 million, of which approximately ~~$9.6~~$25.2 million was cash held by our foreign operations. ~~As discussed within Part I, Item 1 – Note 12, approximately $1,100.0 million of this was used for the acquisition of Dodge on November 1, 2021.~~

Results of Operations

(dollars in millions)

Three Months Ended

October 2,
2021

September 26,
2020
$
Change %
Change
Total net sales $ 160.9 $ 146.3 $ 14.6 10.0 %

Net income $ 6.9 $ 20.4 $ (13.5 ) (66.1 )%

Net income per share available to common stockholders: diluted $ 0.25 $ 0.82
Weighted average common shares: diluted 25,775,794 24,957,158

	Three Months Ended
	October 1, 2022		October 2, 2021			$ Change		% Change
Total net sales	$	369.2	$	160.9		$	208.3		129.4	%

Net income/(loss) available to common stockholders	$	38.1	$	(1.9	)	$	40.0		2,143.6	%

Net income/(loss) per share available to common stockholders: diluted	$	1.31	$	(0.07	)
Weighted average common shares: diluted		29,093,791		25,500,393

Our net sales for the three-month period ended October ~~2, 2021~~1, 2022 increased ~~10.0%~~129.4% compared to the same period last fiscal ~~year. The increase~~year; excluding Dodge sales in the second quarter of fiscal 2023, net sales ~~was a result of a 31.1% increase~~were up 9.9% year over year. Net sales in our ~~industrial markets partially offset by~~Industrial segment increased 290.7% year over year; excluding Dodge, Industrial segment sales increased 7.9% year over year. This reflects a ~~4.4% decrease~~pattern of sustained growth, with strong results in ~~our aerospace markets. The increase in industrial sales was driven by~~areas including the semiconductor, mining, energy, ~~marine~~ and general industrial markets. ~~The decrease~~Net sales in ~~aerospace sales was primarily due to the~~our Aerospace/Defense segment increased 11.4% year over year, led by commercial OEM, ~~markets,~~ which ~~decreased by 7.7% as~~was up 32.4% compared to the same ~~three-month~~ period ~~last year.~~in the prior year while sales to the defense sector were down 15.3%. The increase in commercial aerospace reflects continued recovery in orders from large OEMs as build rates escalate and stability in the aftermarket. Defense sales were negatively impacted by the timing of delivery on parts that require government approval and/or completion of certain milestone achievements prior to invoicing.

Net income available to common stockholders for the second quarter of fiscal ~~2022~~2023 was ~~$6.9~~$38.1 million compared to ~~$20.4~~$1.9 million net loss for the same period last year. Net income for the second quarter of fiscal 2023 was affected by approximately $4.0 million of pre-tax transition services costs associated with the Dodge acquisition. Net loss for the second quarter of fiscal 2022 was affected by approximately ~~$13.0~~$16.9 million of ~~after-tax~~pre-tax costs associated with the acquisition of Dodge ~~$1.5~~and $2.0 million of ~~after-tax~~pre-tax restructuring costs primarily associated with consolidation efforts at one of our domestic manufacturing ~~facilities,~~facilities.

	Six Months Ended
	October 1, 2022		October 2, 2021		$ Change		% Change
Total net sales	$	723.2	$	317.1	$	406.1		128.1	%

Net income available to common stockholders	$	69.7	$	22.2	$	47.5		214.5	%

Net income per share available to common stockholders: diluted	$	2.40	$	0.87
Weighted average common shares: diluted		29,020,403		25,632,845

Our net sales for the six-month period ended October 1, 2022 increased 128.1% compared to the same period last fiscal year; excluding Dodge sales in the first six months of fiscal 2023, net sales were up 11.5% year over year. Net sales in our Industrial segment increased 288.8% year over year; excluding Dodge, Industrial segment sales increased 12.5% year over year. This reflects a pattern of sustained growth, with strong results in areas including the semiconductor, mining, energy, and ~~$2.0 million~~general industrial markets. Net sales in our Aerospace/Defense segment increased 10.7% year over year, led by commercial OEM, which was up 27.8% compared to the same period in the prior year while sales to the defense sector were down 9.6%. The increase in commercial aerospace reflects the recovery in build rates from large OEMs and stability in the aftermarket. Defense sales were negatively impacted by the timing of ~~discrete tax expense primarily~~shipments associated with establishing a valuation allowance on a prior loss carryforward. These costs were partially offset by $0.1 million of tax benefits associated with share-based compensation. Net income for the second quarter of fiscal 2021 was affected by $2.8 million of after-tax restructuring costs and related items primarily associated with the consolidation of two manufacturing facilities, and $0.1 million of losses on foreign exchange partially offset by $0.4 million of tax benefits associated with share-based compensation and $0.1 million of other discrete tax benefits.our marine business.

Six Months Ended

October 2,
2021

September 26,
2020
$
Change %
Change
Total net sales $ 317.1 $ 302.8 $ 14.3 4.7 %

Net income $ 32.9 $ 43.1 $ (10.2 ) (23.6 )%

Net income per share available to common stockholders: diluted $ 1.27 $ 1.73
Weighted average common shares: diluted 25,544,088 24,944,608

Net sales increased $14.3 million, or 4.7% for the six-month period ended October 2, 2021 over the same period last year. The increase in net sales was mainly the result of a 31.0% increase in industrial sales partially offset by an 11.8% decrease in aerospace sales. The increase in industrial sales was primarily dueincome available to ~~mining, energy, and general industrial markets. The decrease in aerospace sales was realized in both our commercial and defense markets over the six-month period.~~

~~Net income~~common stockholders for the six months ended October ~~2, 2021~~1, 2022 was ~~$32.9~~$69.7 million compared to ~~$43.1~~$22.2 million for the same period last year. Net income for the six-month period in fiscal 2023 was affected by approximately $7.7 million of pre-tax transition services costs associated with the Dodge acquisition. Net income for the six-month period in fiscal 2022 was affected by approximately ~~$13.0~~$16.9 million of ~~after-tax~~pre-tax costs associated with the acquisition of Dodge ~~$2.0~~and $2.5 million of ~~after-tax~~pre-tax restructuring costs ~~and $2.0 million of discrete tax expense~~ primarily associated with ~~establishing a valuation allowance on a prior loss carryforward. These costs were partially offset by $2.2 million~~consolidation efforts at one of tax benefits associated with share-based compensation and $0.2 million of other discrete tax benefits. Net income of $43.1 million in fiscal 2021 was affected by $3.7 million of after-tax restructuring costs and related items, and $0.2 million of losses on foreign exchange partially offset by $0.7 million of tax benefits associated with share-based compensation, and $0.1 million of other discrete tax benefits.our domestic manufacturing facilities.

Gross Margin

	Three Months Ended											Three Months Ended
	October 2, 2021			September 26, 2020			$ Change		% Change			October 1, 2022			October 2, 2021			$ Change		% Change

Gross Margin	$	62.5		$	56.6		$	5.9		10.4	%	$	151.1		$	62.5		$	88.6		142.0	%
% of net sales		38.8	%		38.7	%							40.9	%		38.8	%

Gross margin was ~~38.8%~~40.9% of net sales for the second quarter of fiscal ~~2022~~2023 compared to ~~38.7%~~38.8% for the second quarter of fiscal ~~2021. Gross~~2022. The increase in gross margin ~~for the second quarter~~as a percentage of ~~fiscal 2022~~net sales was ~~impacted~~driven by increased volumes and efficiencies achieved and approximately $0.9 million of restructuring costs associated with consolidation efforts at one of our domestic ~~facilities. Gross margin for~~facilities during the second quarter of fiscal ~~2022 included $2.0 million in inventory rationalization costs associated with the consolidation of two manufacturing facilities.~~2022.

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Gross Margin $ 126.2 $ 116.0 $ 10.2 8.8 %
% of net sales 39.8 % 38.3 %

	Six Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Gross Margin	$	292.3		$	126.2		$	166.1		131.5	%
% of net sales		40.4	%		39.8	%

Gross margin was ~~39.8%~~40.4% of net sales for the first six months of fiscal ~~2022~~2023 compared to ~~38.3%~~39.8% for the same period last year. Gross margin for the six-month period of fiscal 2022 was impacted by approximately $0.9 million of restructuring costs associated with consolidation efforts at one of our domestic facilities. Gross margin for the six-month period of fiscal 2021 was impacted by $0.8 million of capacity inefficiencies driven by the decrease in volume and $2.0 million in inventory rationalization costs associated with the consolidation of two manufacturing facilities. The increase in gross margin year over year was primarily the result of cost efficiencies achieved through recent restructuring and consolidation efforts made throughout the Company.

Selling, General and Administrative

Three Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

SG&A $ 29.7 $ 26.0 $ 3.7 14.0 %
% of net sales 18.4 % 17.8 %

	Three Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

SG&A	$	57.5		$	40.2		$	17.3		43.0	%
% of net sales		15.6	%		25.0	%

SG&A for the second quarter of fiscal ~~2022~~2023 was ~~$29.7~~$57.5 million, or ~~18.4%~~15.6% of net sales, as compared to ~~$26.0~~$40.2 million, or ~~17.8%~~25.0% of net sales, for the same period of fiscal ~~2021. This increase was~~2022. The improvement in SG&A as a % of net sales is primarily due to ~~$2.4~~$12.4 million less stock-based compensation expense recognized in the second quarter of ~~additional personnel costs, $1.0 million of additional share-based compensation, and $0.3 million of other items.~~fiscal 2023 compared to the prior year.

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

SG&A $ 59.5 $ 52.9 $ 6.6 12.5 %
% of net sales 18.8 % 17.5 %

	Six Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

SG&A	$	113.3		$	71.4		$	41.9		58.7	%
% of net sales		15.7	%		22.5	%

SG&A expenses increased by ~~$6.6~~$41.9 million to ~~$59.5~~$113.3 million for the first six months of fiscal ~~2022~~2023 compared to ~~$52.9~~$71.4 million for the same period last year. ~~This increase was due to $4.8~~SG&A for the first six months of fiscal 2023 included approximately $48.0 million of ~~additional~~costs from the Dodge business and increases in professional fees and personnel costs, ~~$1.3 million additional share-based~~partially offset by a decrease in stock compensation ~~and $0.5 million of other items.~~expense.

Other, Net

Three Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Other, net $ 5.7 $ 4.2 $ 1.5 34.6 %
% of net sales 3.5 % 2.9 %

	Three Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Other, net	$	21.6		$	5.7		$	15.9		281.3	%
% of net sales		5.9	%		3.5	%

Other operating expenses for the second quarter of fiscal ~~2022~~2023 totaled ~~$5.7~~$21.6 million compared to ~~$4.2~~$5.7 million for the same period last year. For the second quarter of fiscal 2023, other operating expenses included $4.0 million of TSA costs and other costs associated with the Dodge acquisition, $16.8 million of amortization of intangible assets, and $0.8 million of other items. For the second quarter of fiscal 2022, other operating expenses included $1.1 million of restructuring costs and related items, $2.8 million of amortization of intangible assets, $1.4 million of costs associated with the acquisition of Dodge and $0.4 million of other costs. For the second quarter of fiscal 2021, other operating expenses included $1.5 million of restructuring costs and related items, $2.6 million of amortization of intangible assets and $0.1 million of other costs.

	Six Months Ended											Six Months Ended
	October 2, 2021			September 26, 2020			$ Change		% Change			October 1, 2022			October 2, 2021			$ Change		% Change

Other, net	$	8.9		$	8.0		$	0.9		11.2	%	$	42.5		$	8.9		$	33.6		376.3	%
% of net sales		2.8	%		2.6	%							5.9	%		2.8	%

Other operating expenses for the first six months of fiscal ~~2022~~2023 totaled ~~$8.9~~$42.5 million compared to ~~$8.0~~$8.9 million for the same period last year. For the first six months of fiscal 2023, other operating expenses were comprised mainly of $7.8 million of TSA costs and other costs associated with the Dodge acquisition, $34.1 million of amortization of intangible assets, and $0.6 million of other items. For the first six months of fiscal 2022, other operating expenses were comprised mainly of $5.4 million in amortization of intangibles, $1.6 million of restructuring and related items, $1.4 million of costs associated with the acquisition of Dodge, and $0.5 million of other items. For the first six months of fiscal 2021, other operating expenses were comprised mainly of $5.1 million in amortization of intangibles, $2.6 million of restructuring and related items and $0.3 million of other items.

Interest Expense, Net

Three Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Interest expense, net $ 15.8 $ 0.3 $ 15.5
4,497.7
%
% of net sales 9.8 % 0.2 %

	Three Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Interest expense, net	$	18.3		$	15.8		$	2.5		16.2	%
% of net sales		5.0	%		9.8	%

Interest expense, net, generally 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 ~~$15.8~~$18.3 million for the second quarter of fiscal ~~2022~~2023 compared to ~~$0.3~~$15.8 million for the same period last year. ~~During~~The Company incurred approximately $15.5 million in costs associated with the amortization of fees for a bridge financing commitment established in connection with the Dodge acquisition during the second quarter of fiscal 2022, which was replaced with the Term Loan Facility and Senior Notes in the third quarter of fiscal 2022. The increase in interest expense was primarily due to the increase in LIBOR during the second quarter of fiscal 2023.

	Six Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Interest expense, net	$	34.1		$	16.1		$	18.0		112.1	%
% of net sales		4.7	%		5.1	%

Interest expense, net was $34.1 million for the first six months of fiscal 2023 compared to $16.1 million for the first six months of fiscal 2022. The Company incurred approximately $15.5 million in costs associated with the amortization of fees for a bridge financing commitment established in association with the Dodge ~~acquisition. Subsequent to~~acquisition during the ~~end~~second quarter of ~~the quarter, this commitment~~fiscal 2022, which was replaced with the ~~permanent financings discussed~~Term Loan Facility and Senior Notes in ~~Notes 5 and 12~~the third quarter of ~~Part 1,~~fiscal 2022. The increase in interest expense was primarily due interest we are now incurring related to the debt disclosed within Item 1, ~~above.~~

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Interest expense, net $ 16.1 $ 0.8 $ 15.3
1,994.9
%
% of net sales 5.1 % 0.3 %

~~Interest expense, net was $16.1 million for the first six months~~Part I, Note 10 of fiscal 2022 compared to $0.8 million for the first six months of fiscal 2021. During the six months ended October 2, 2021 the Company incurred approximately $15.5 million in costs associated with the amortization of fees for a bridge financing commitment established in association with the Dodge acquisition. Subsequent to the end of the second quarter, this ~~commitment was replaced with the permanent financings discussed in Notes 5 and 12 of Part 1, Item 1 above.~~report.

Other ~~Non-operating Expense~~Non-Operating Expense/(Income)

Three Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Other non-operating expense $ (0.3 ) $ 0.2 $ (0.5 ) (237.9 )%
% of net sales (0.2 )% 0.1 %

	Three Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Other non-operating expense /(income)	$	0.2		$	(0.3	)	$	0.5		(163.2	)%
% of net sales		0.0	%		(0.2	)%

Other non-operating expenses were ~~$(0.3)~~$0.2 million for the second quarter of fiscal ~~2022~~2023 compared to ~~$0.2~~$0.3 million of income for the same period in the prior year. For the second quarter of fiscal ~~2022,~~2023, other non-operating expenses were primarily comprised of $0.4 million of post-retirement benefit costs, partially offset by $0.2 million of foreign exchange gain. For the second quarter of fiscal 2022, other non-operating income was comprised of $0.5 million of income associated with short-term marketable securities partially offset by $0.1 million of foreign exchange loss and $0.1 million of other items. ~~For the second quarter of fiscal 2021, other non-operating expenses were comprised of $0.1 million of foreign exchange loss and $0.1 million of other items.~~

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Other non-operating expense $ (0.8 ) $ 0.3 $ (1.1 ) (398.8 )%
% of net sales (0.2 )% 0.1 %

	Six Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Other non-operating expense /(income)	$	1.0		$	(0.8	)	$	1.8		(225.8	)%
% of net sales		0.1	%		(0.2	)%

Other non-operating expenses were ~~$(0.8)~~$1.0 million for the first six months of fiscal ~~2022~~2023 compared to ~~$0.3~~$0.8 million of income for the same period in the prior year. For the first six months of fiscal ~~2022,~~2023, other non-operating expenses were comprised of $1.4 million of post-retirement benefit costs, partially offset by $0.4 million of foreign exchange gain. For the first six months of fiscal 2022, other non-operating income was comprised of $1.2 million of income associated with short-term marketable securities partially offset by $0.1 million of foreign exchange loss and $0.3 million of other items. ~~For the first six months of fiscal 2021, other non-operating expenses were comprised of $0.2 million of foreign exchange loss and $0.1 million of other items.~~

Income Taxes

Three Months Ended
October 2,
2021 September 26,
2020

Income tax expense $ 4.7 $ 5.4
Effective tax rate 40.5 % 20.9 %

	Three Months Ended
	October 1, 2022			October 2, 2021

Income tax expense	$	9.7		$	2.4
Effective tax rate		18.1	%		223.5	%

Income tax expense for the three-month period ended October ~~2, 2021~~1, 2022 was ~~$4.7~~$9.7 million compared to ~~$5.4~~$2.4 million for the three-month period ended ~~September 26, 2020.~~October 2, 2021. Our effective income tax rate for the three-month period ended October ~~2, 2021~~1, 2022 was ~~40.5%~~18.1% compared to ~~20.9%~~223.5% for the three-month period ended ~~September 26, 2020.~~October 2, 2021. The effective income tax rate for the three-month period ended October 1, 2022 of 18.1% includes $2.4 million of tax benefits associated with share-based compensation and $0.2 million of other items. The effective income tax rate without discrete items would have been 22.9%. The effective income tax rate for the three-month period ended October 2, 2021 of ~~40.5%~~223.5% included ~~$2.0 million of discrete tax expense primarily associated with establishing a valuation allowance on a prior loss carryforward partially offset by~~ $0.1 million of tax benefits associated with share-based ~~compensation;~~compensation offset by the establishment of a $1.9 million valuation allowance for capital loss carryforwards we do not expect to recognize and $0.1 million of other items. The effective income tax rate without ~~these~~discrete items for the three-month period ended October 2, 2021 would have been ~~24.5%~~53.5%. The effective income tax rate ~~for~~without discrete items differed from the ~~three-month~~statutory rate primarily due to nondeductible share-based compensation expense recognized in the period ~~ended September 26, 2020 of 20.9% included $0.4 million of tax benefits associated with share-based compensation; the effective income tax rate without these benefits would have been 22.0%.~~and R&D credits.

Six Months Ended
October 2,
2021 September 26,
2020

Income tax expense $ 9.6 $ 11.0
Effective tax rate 22.5 % 20.4 %

	Six Months Ended
	October 1, 2022			October 2, 2021

Income tax expense	$	20.2		$	7.9
Effective tax rate		19.9	%		25.8	%

Income tax expense for the six-month period ended October ~~2, 2021~~1, 2022 was ~~$9.6~~$20.2 million compared to ~~$11.0~~$7.9 million for the six-month period ended ~~September 26, 2020.~~October 2, 2021. Our effective income tax rate for the six-month period ended October ~~2, 2021~~1, 2022 was ~~22.5%~~19.9% compared to ~~20.4%~~25.8% for the six-month period ended ~~September 26, 2020.~~October 2, 2021. The effective income tax rate for the six-month period ended October ~~2, 2021~~1, 2022 of ~~22.5% included $2.2~~19.9% includes $3.0 million of tax benefits associated with share-based compensation partially offset by ~~$2.0~~$0.2 million of discrete tax expense primarily associated with establishing a valuation allowance on a loss carryforward; the effective income tax rate without these benefits and other items would have been ~~23.6%~~23.0%. The effective income tax rate for the six-month period ended ~~September 26, 2020~~October 2, 2021 of ~~20.4% included $0.7~~25.8% includes $2.2 million of tax benefits associated with share-based ~~compensation;~~compensation offset by the establishment of a $1.9 million valuation allowance for capital loss carryforwards we don’t expect to recognize and $0.1 million of other items. The effective income tax rate without these benefits and other items for the six-month period ended October 2, 2021 would have been ~~21.6%~~27.2%.

Segment Information

We ~~have~~previously reported our financial results under four ~~reportable product segments: Plain Bearings,~~operating segments (Plain Bearings; Roller ~~Bearings,~~Bearings; Ball ~~Bearings~~Bearings; and Engineered ~~Products.~~Products), but the Dodge acquisition has resulted in a change in the internal organization of the Company and how our chief operating decision maker makes operating decisions, assesses the performance of the business, and allocates resources. Accordingly, we will now report our financial results under two operating segments: Aerospace/Defense; and Industrial. Financial information for fiscal 2022 has been recast to conform to the new segment presentation. We use gross margin as the primary measurement to assess the financial performance of each reportable segment.

~~Plain Bearings~~Aerospace/Defense Segment

	Three Months Ended												Three Months Ended
	October 2, 2021			September 26, 2020			$ Change			% Change			October 1, 2022			October 2, 2021			$ Change		% Change

Total net sales	$	74.1		$	71.1		$	3.0			4.3	%	$	103.5		$	92.9		$	10.6		11.4	%

Gross margin	$	28.0		$	29.8		$	(1.8	)		(6.0	)%	$	41.0		$	36.6		$	4.4		12.2	%
% of segment net sales		37.7	%		41.9	%								39.6	%		39.4	%

SG&A	$	5.9		$	5.3		$	0.6			12.7	%	$	7.4		$	7.2		$	0.2		2.5	%
% of segment net sales		8.0	%		7.4	%								7.2	%		7.8	%

Net sales increased ~~$3.0~~$10.6 million, or ~~4.3%~~11.4%, for the three months ended October ~~2, 2021~~1, 2022 compared to the same period last year. Commercial aerospace increased during the period 31.3% year over year. The commercial OEM business was up 32.4%, demonstrating continued recovery as build rates and orders escalate in the OEM markets. Our defense markets, which represented approximately 32.3% of segment sales, decreased by approximately 15.3% during the period. These markets were impacted by the timing of deliveries to certain government customers which require sign off or achievement of certain milestones prior to shipment. Overall distribution and aftermarket sales, which represent 18.4% of segment sales, increased 14.9% year over year.

Gross margin as a percentage of segment net sales was 39.6% for the second quarter of fiscal 2023 compared to 39.4% for the same period last year. The increase in gross margin as a percentage of net sales was driven by increased volumes and greater cost efficiencies achieved in our plants during the period.

	Six Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Total net sales	$	202.9		$	183.3		$	19.6		10.7	%

Gross margin	$	79.6		$	75.2		$	4.4		5.9	%
% of segment net sales		39.2	%		41.0	%

SG&A	$	14.9		$	14.5		$	0.4		2.8	%
% of segment net sales		7.4	%		7.9	%

Net sales increased $19.6 million, or 10.7%, for the six months ended October 1, 2022 compared to the same period last year. The ~~4.3%~~10.7% increase was primarily driven by a ~~22.8%~~25.0% increase in ~~the industrial markets partially offset by a decrease of 3.0% in~~ our commercial aerospace ~~markets. The increase in industrial net sales was mostly driven by the general industrial markets to~~market, both OEM and ~~distribution customers. The decrease in aerospace net sales~~aftermarket, while our defense market was down 9.6% year over year due to the timing of shipments related to our marine business. During the year, we have noted improvement in the sales and orders to our commercial aerospace ~~OEM market~~customers as build rates continue to grow. Our backlog and ~~aftermarket.~~recent results reflect the early stages of this process which we expect to continue to see in upcoming quarters. Overall distribution and aftermarket sales were up 8.6% year over year.

Gross margin as a percentage of segment net sales was 37.7% for the second quarter of fiscal 2022 compared to 41.9% for the same period last year. Gross margin for the three-month period ended October 2, 2021 was impacted by approximately $0.9 million of inventory rationalization costs as part of a restructuring effort at one of our domestic facilities. The decrease in gross margin as a percentage of net sales was also impacted by product mix.

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Total net sales $ 147.4 $ 149.9 $ (2.5 ) (1.7 )%

Gross margin $ 59.5 $ 61.8 $ (2.3 ) (3.8 )%
% of segment net sales 40.4 % 41.2 %

SG&A $ 11.8 $ 10.5 $ 1.3 12.2 %
% of segment net sales 8.0 % 7.0 %

Net sales decreased $2.5 million, or 1.7%, for the six months ended October 2, 2021 compared to the same period last year. The 1.7% decrease was primarily driven by a decrease of 10.8% in our aerospace markets offset by a 23.8% increase in the industrial markets. The decrease in aerospace was primarily due to both the commercial and defense markets. The increase in industrial sales was mostly driven by the general industrial markets to both OEM and distribution customers.

~~Gross margin as a percentage of~~ net sales decreased to ~~40.4%~~39.2% for the first six months of fiscal ~~2022~~2023 compared to ~~41.2%~~41.0% for the same period last year. ~~Gross~~The decrease in gross margin ~~for the six-month period ended October 2, 2021 was impacted by approximately $0.9 million of inventory rationalization costs as part of a restructuring effort at one of our domestic facilities.~~percentage is due to product mix.

~~Roller Bearings~~Industrial Segment

Three Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Total net sales $ 27.3 $ 21.6 $ 5.7 26.6 %

Gross margin $ 10.1 $ 6.2 $ 3.9 62.4 %
% of segment net sales 37.1 % 28.9 %

SG&A $ 1.5 $ 1.2 $ 0.3 26.1 %
% of segment net sales 5.4 % 5.4 %

	Three Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Total net sales	$	265.6		$	68.0		$	197.6		290.7	%

Gross margin	$	110.1		$	25.8		$	84.3		325.4	%
% of segment net sales		41.5	%		38.1	%

SG&A	$	30.1		$	6.0		$	24.1		408.6	%
% of segment net sales		11.3	%		8.7	%

Net sales increased ~~$5.7~~$197.6 million, or ~~26.6%~~290.7%, for the three months ended October ~~2, 2021~~1, 2022 compared to the same period last year. ~~Our industrial markets increased by 68.9% while our aerospace markets decreased 16.7%.~~ The increase ~~in industrial net sales~~ was primarily due to three months of Dodge sales in fiscal 2023 and continued strong performance across the majority of our industrial markets. Excluding Dodge sales of $192.3 million, net sales increased $5.3 million, or 7.9%, period over period. This increase was driven by performance in semiconductor, energy, mining, ~~class 8 truck, energy,~~ and the general industrial markets. Sales to distribution and the aftermarket reflected 67.0% of our quarterly industrial sales. These distribution and aftermarket sales increased 637.2% compared to the same quarter in the prior year and 0.6% organically.

Gross margin for the three months ended October 1, 2022 was 41.5% of net sales, compared to 38.1% in the comparable period in fiscal 2022. The ~~decrease~~improved gross margin is due to price increases and also the unfavorable impact of $0.9 million of restructuring costs associated with consolidation efforts at one of our domestic facilities in ~~aerospace~~the second quarter of fiscal 2022.

	Six Months Ended
	October 1, 2022			October 2, 2021			$ Change		% Change

Total net sales	$	520.3		$	133.8		$	386.5		288.8	%

Gross margin	$	212.7		$	51.0		$	161.7		316.8	%
% of segment net sales		40.9	%		38.1	%

SG&A	$	60.1		$	11.7		$	48.4		415.0	%
% of segment net sales		11.5	%		8.7	%

Net sales increased $386.5 million, or 288.8%, for the six months ended October 1, 2022 compared to the same period last year. The increase was primarily due to six months of Dodge sales in fiscal 2023 and strong performance across our industrial markets. Excluding Dodge sales, net sales increased $16.8 million, or 12.5%, period over period. Sales to distribution and the aftermarket increased 601.0% over last year, and 6.1% on an organic basis. The overall segment increase, excluding the addition of Dodge, was driven by performance in semiconductor, energy, mining, and the ~~commercial and defense OEM and aftermarkets.~~general industrial markets.

Gross margin for the three months ended October 2, 2021 was 37.1% of net sales, compared to 28.9% in the comparable period in fiscal 2021. This increase in the gross margin as a percentage of net sales was primarily due to $2.0 million in inventory rationalization costs incurred in fiscal 2021 associated with the consolidation of two manufacturing facilities and decreased volumes during the period.

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Total net sales $ 52.6 $ 44.5 $ 8.1 18.2 %

Gross margin $ 19.2 $ 14.6 $ 4.6 31.4 %
% of segment net sales 36.6 % 32.9 %

SG&A $ 2.8 $ 2.4 $ 0.4 17.6 %
% of segment net sales 5.4 % 5.4 %

Net sales increased $8.1 million, or 18.2%, for the six months ended October 2, 2021 compared to the same period last year. Our industrial markets increased 69.5% while our aerospace markets decreased by 26.0%. The increase in industrial sales was primarily due to mining, energy, class 8 truck and general industrial market activity while the decrease in aerospace was driven by the commercial OEM and commercial and defense aftermarkets.

Gross margin for the six months ended October ~~2, 2021~~1, 2022 was ~~36.6%~~40.9% of net sales, compared to ~~32.9%~~38.1% in the ~~comparable~~same period in fiscal ~~2021. This~~2022. The increase in ~~the~~ gross margin ~~as a percentage of net sales was primarily due to $2.0 million in inventory rationalization costs incurred in fiscal 2021 associated with~~is driven by price increases and the ~~consolidation of two manufacturing facilities and decreased volumes during the period. During~~fact that gross margin for the first six months of fiscal ~~2021, gross margin was also impacted by approximately $0.3~~2022 included the unfavorable impact of $0.9 million of ~~capacity inefficiencies driven by the impact~~restructuring costs associated with consolidation efforts at one of ~~the COVID-19 pandemic.~~

~~Ball Bearings Segment~~

Three Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Total net sales $ 24.4 $ 21.1 $ 3.3 15.8 %

Gross margin $ 11.1 $ 9.1 $ 2.0 21.5 %
% of segment net sales 45.4 % 43.3 %

SG&A $ 1.6 $ 1.3 $ 0.3 24.9 %
% of segment net sales 6.6 % 6.1 %

~~Net sales increased by $3.3 million for the second quarter of fiscal 2022 compared to the same period last year. Our aerospace markets increased 9.8% while~~ our ~~industrial sales increased 19.0%. The increase in aerospace net sales was primarily driven by the defense markets. The increase in industrial was primarily due to the general industrial markets.~~

Gross margin as a percentage of net sales was 45.4% for the second quarter of fiscal 2022 as compared to 43.3% for the same period last year. The increase in gross margin year over year is a result of product mix during the period.

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Total net sales $ 47.6 $ 39.9 $ 7.7 19.1 %

Gross margin $ 21.8 $ 17.1 $ 4.7 27.7 %
% of segment net sales 45.8 % 42.7 %

SG&A $ 3.3 $ 2.6 $ 0.7 23.4 %
% of segment net sales 6.8 % 6.6 %

Net sales increased $7.7 million, or 19.1% for the six months ended October 2, 2021 compared to the same period last year. Our industrial market sales increased 26.2% while sales to our aerospace markets increased 6.3%. The increase in industrial was primarily due to the general industrial market to both distribution and OEM customers. The increase in aerospace net sales was primarily driven by the defense markets.

Gross margin as a percentage of net sales increased to 45.8% for the six months ended October 2, 2021 compared to 42.7% for the same period last year. The decrease was primarily due to increased sales during the period.

~~Engineered Products Segment~~

Three Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Total net sales $ 35.1 $ 32.6 $ 2.5 7.6 %

Gross margin $ 13.3 $ 11.5 $ 1.8 15.8 %
% of segment net sales 37.9 % 35.2 %

SG&A $ 4.2 $ 3.8 $ 0.4 10.1 %
% of segment net sales 12.0 % 11.8 %

Net sales increased $2.5 million, or 7.6%, for the second quarter of fiscal 2022 compared to the same period last year. Our industrial markets increased 25.8% while our aerospace markets decreased 6.9%. The increase in our industrial net sales was driven by the marine, machine tools and general industrial markets. The decrease in aerospace net sales was primarily driven by the commercial and defense OEM markets.

Gross margin as a percentage of net sales was 37.9% for the second quarter of fiscal 2022 compared to 35.2% for the same period last year. This increase, period over period, was primarily attributable to product mix and realization of benefit from recent consolidation and restructuring efforts.

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

Total net sales $ 69.6 $ 68.5 $ 1.1 1.6 %

Gross margin $ 25.7 $ 22.5 $ 3.2 14.2 %
% of segment net sales 37.0 % 32.9 %

SG&A $ 8.5 $ 7.7 $ 0.8 10.8 %
% of segment net sales 12.2 % 11.2 %

Net sales increased $1.1 million, or 1.6%, for the six months ended October 2, 2021 compared to the same period last year. Our industrial sales increased 18.8% while our aerospace sales decreased 12.6%. The increase in industrial sales was driven by the machine tools and general industrial markets. The decrease in aerospace sales was primarily driven by the commercial and defense OEM markets.

Gross margin as a percentage of net sales increased to 37.0% for the six months ended October 2, 2021 compared to 32.9% for the same period last year. This increase was primarily attributable to the realization of cost efficiencies achieved through recent consolidation and restructuring efforts. During the first half of fiscal 2021, gross margin was also impacted by approximately $0.5 million of capacity inefficiencies driven by the impact of the COVID-19 pandemic.domestic facilities.

Corporate

Three Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

SG&A $ 16.4 $ 14.5 $ 1.9 13.6 %
% of total net sales 10.2 % 9.9 %

	Three Months Ended
	October 1, 2022			October 2, 2021			$ Change			% Change

SG&A	$	20.0		$	27.0		$	(7.0	)		(26.2	)%
% of total net sales		5.4	%		16.8	%

Corporate SG&A ~~increased $1.9~~was $20.0 million, or ~~13.6%,~~5.4% of sales for the second quarter of fiscal ~~2022~~2023 compared to $27.0 million, or 16.8% of sales for the same period last year. ~~This~~The year over year decrease was primarily due to ~~an increase of $1.0 million~~a decrease in stock compensation expense, partially offset by increases in other personnel costs and ~~$1.0 million of share-based compensation expenses, partially offset by $0.1 million of other items.~~ professional fees.

Six Months Ended
October 2,
2021 September 26,
2020 $
Change %
Change

SG&A $ 33.1 $ 29.6 $ 3.5 11.7 %
% of total net sales 10.4 % 9.8 %

	Six Months Ended
	October 1, 2022			October 2, 2021			$ Change			% Change

SG&A	$	38.3		$	45.2		$	(6.9	)		(15.3	)%
% of total net sales		5.3	%		14.3	%

Corporate SG&A ~~increased $3.5~~decreased $6.9 million for the six months ended October ~~2, 2021~~1, 2022 compared to the same period last year due to ~~an increase of $2.0 million~~a decrease in stock compensation expense, partially offset by increases in other personnel costs ~~$1.3 million of share-based compensation expenses,~~ and ~~$0.2 million of other items.~~professional fees.

Liquidity and Capital Resources

(dollars in millions in tables)

Our business is capital-intensive. Our capital requirements include manufacturing equipment and materials. In addition, we have historically fueled our growth, in part, through ~~acquisitions.~~acquisitions, including the Dodge acquisition completed on November 1, 2021. We have historically met our working capital, capital expenditure ~~requirements~~ and acquisition funding needs through our net cash flows provided by operations, various debt arrangements and sale of equity to investors. We believe that operating cash flows and available credit under the Revolving Credit Facility ~~and Foreign Revolver~~ will provide adequate resources to fund internal growth initiatives for the foreseeable future. For further discussion regarding the funding of the Dodge acquisition, refer to Part I, Item 1 – ~~Notes 5 and 12.~~Note 13.

Our ability to meet future working capital, capital ~~expenditures~~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 prices for steel and our ability to pass through 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.

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, ~~partially or completely,~~ relocate, ~~production lines,~~ consolidate or otherwise dispose of those 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.

Liquidity

As of October ~~2, 2021,~~1, 2022, we had cash and cash equivalents of ~~$1,348.6~~$88.5 million of which approximately ~~$9.6~~$25.2 million was cash held by our foreign operations. ~~As discussed within Part I, Item 1 – Note 12, approximately $1,100.0 million of this was used for the acquisition of Dodge on November 1, 2021.~~ 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.

Domestic Credit Facility

~~The Company’s credit agreement~~

On November 1, 2021 RBC Bearings Incorporated, our top holding company, and our Roller Bearing Company of America, Inc. subsidiary (“RBCA”) entered into a Credit Agreement (the “New Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer and the other lenders party thereto, and terminated the Company’s prior Credit Agreement, which was entered into with Wells Fargo in 2015 (the “2015 Credit Agreement”) provides the Company with a $250.0 million revolving credit facility (the “Revolver”), which expires on January 31, 2024. As of October 2, 2021, $0.9 million in unamortized debt issuance costs remained.

Amounts outstanding under the Revolver generally bear interest at (a) a base rate determined by reference to the higher of (1) Wells Fargo’s prime lending rate, (2) the federal funds effective rate plus 1/2 of 1% and (3) the one-month LIBOR rate plus 1%, or (b) LIBOR plus a specified margin, depending on the type of borrowing being made.. The applicable margin is based on the Company’s consolidated ratio of total net debt to consolidated EBITDA at each measurement date. As of October 2, 2021, the Company's margin was 0.00% for base rate loans and 0.75% for LIBOR loans.

The 2015 Credit Agreement requires the Company to comply with various covenants including, among other things, a financial covenant to maintain a ratio of consolidated net debt to adjusted EBITDA not greater than 3.50 to 1. The 2015 Credit Agreement allows the Company to, among other things, make distributions to shareholders, repurchase its stock, incur other debt or liens, or acquire or dispose of assets provided that the Company complies with certain requirements and limitations of the 2015 Credit Agreement. As of October 2, 2021, the Company was in compliance with all such covenants.

The Company’s domestic subsidiaries have guaranteed the Company’s obligations under the 2015 Credit Agreement, and the Company’s obligations and the domestic subsidiaries’ guaranty are secured by a pledge of substantially all of the domestic assets of the Company and its domestic subsidiaries.

As of October 2, 2021, approximately $3.6 million of the Revolver was being utilized to provide letters of credit to secure the Company’s obligations relating to certain insurance programs, and the Company had the ability to borrow up to an additional $246.4 million under the Revolver as of October 2, 2021. On November 1, 2021, the 2015 Credit Agreement was terminated and replaced with the New Credit Agreement ~~referred to below.~~

~~Our New Credit Agreement with Wells Fargo~~ provides the Company with (a) ~~the Term Loan Facility,~~ a ~~$1,300~~$1,300.0 million term loan facility ~~that~~(the “Term Loan Facility”), which was used to fund a portion of the cash purchase price for the acquisition of Dodge and to pay related fees and expenses, and (b) ~~the Revolving Credit Facility,~~ a ~~$500~~$500.0 million revolving credit ~~facility.~~ facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Facilities”). Debt issuance costs associated with the New Credit Agreement totaled $14.9 million and will be amortized over the life of the New Credit Agreement.

Amounts outstanding under the Facilities generally bear interest at either, at ~~our~~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 1/2 of 1.00% and (iii) the one-month LIBOR rate plus 1.00% or (b) the LIBOR rate plus a specified margin, depending on the type of borrowing being made. The applicable margin is based on the Company’s consolidated ratio of total net debt to consolidated EBITDA from time to time. Currently, the Company’s margin is ~~0.75%~~0.50% for base rate loans and ~~1.75%~~1.50% for LIBOR rate loans. The Facilities are subject to a “LIBOR” floor of 0.00% and contain “hard-wired” LIBOR replacement provisions as set forth in the New Credit Agreement. As of October 1, 2022, the Company’s commitment fee rate is 0.20% and the letter of credit fee rate was 1.50%.

The Term Loan ~~Facility and the Revolving Credit~~ Facility will mature on November 2, 2026 ~~(the “Maturity Date”).~~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. Commencing one full fiscal quarter after the execution of the New Credit Agreement,~~penalty, which will offset future quarterly amortization installments. The required future principal payments on the Term Loan Facility are $0 for the remainder of fiscal 2023, $0 for fiscal 2024, and $0 for fiscal 2025, due to prepayments previously made, and approximately $87.5 million for fiscal 2026, and $942.5 million for fiscal 2027. The Revolving Credit Facility will ~~amortize in quarterly installments as set forth in~~mature on November 2, 2026, at which time all amounts outstanding under the ~~schedule included in Note 12 of Part 1, Item 1, above, with the balance payable on the Maturity Date unless otherwise extended in accordance with the terms of the Term Loan Facility.~~Revolving Credit Facility will be payable.

The New Credit Agreement requires the Company to comply with various covenants, including the following financial ~~covenants beginning with the test period ending December 31, 2021:~~covenants: (a) a maximum Total Net Leverage Ratio of 5.50:1.00, which maximum Total Net Leverage Ratio shall decrease during certain subsequent test periods as set forth in the New 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 ~~Borrower~~Company by 0.50:1.00 for a period of ~~twelve (12)~~12 months after the consummation of a material acquisition), and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of October 1, 2022, the Company was in compliance with all debt covenants.

The New Credit Agreement allows the Company to, among other things, make distributions to stockholders, repurchase its stock, incur other debt or liens, or acquire or dispose of assets provided that the Company complies with certain requirements and limitations of the New Credit Agreement.

The Company’s domestic subsidiaries have guaranteed the Company’s obligations under the New Credit Agreement, and the Company’s obligations and the domestic subsidiaries’ guaranty are secured by a pledge of substantially all of the domestic assets of the Company and its domestic subsidiaries.

~~Approximately $3.6~~As of October 1, 2022, $1,030.0 million was outstanding under the Term Loan Facility and approximately $3.7 million of the Revolving Credit Facility iswas being utilized to provide letters of credit to secure the Company’s obligations relating to certain insurance ~~programs. The~~programs, and the Company ~~has~~had the ability to borrow up to an additional ~~$496.4~~$496.3 million under the Revolving Credit ~~Facility as~~Facility.

Senior Notes

On October 7, 2021, RBCA issued $500.0 million aggregate principal amount of 4.375% Senior Notes due 2029 (the “Senior Notes”). The net proceeds from the issuance of the Senior Notes were approximately $492.0 million after deducting initial purchasers’ discounts and commissions and offering expenses. On November 1, ~~2021.~~2021, the Company used the proceeds to fund a portion of the cash purchase price for the acquisition of Dodge.

Interest on the Senior Notes accrues at a rate of 4.375% and is payable semi–annually in cash in arrears on April 15 and October 15 of each year

The Senior Notes will mature on October 15, 2029. The Company may redeem some or all of the Senior Notes at any time on or after October 15, 2024 at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company may also redeem up to 40% of the Senior Notes using the proceeds of certain equity offerings completed before October 15, 2024, at a redemption price equal to 104.375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to October 15, 2024, the Company may redeem some or all of the Senior Notes at a price equal to 100% of the principal amount, plus a “make–whole” premium, 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.

Foreign Term Loan and Revolving Credit Facility

~~Our Foreign~~

On August 15, 2019, one of our foreign subsidiaries, Schaublin SA (“Schaublin”), entered into two separate credit agreements (the “Foreign Credit ~~Agreements~~Agreements”) with Credit Suisse (Switzerland) Ltd. ~~provided us with financing~~ to ~~acquire~~(i) finance the acquisition of Swiss Tool, ~~in 2019~~ and (ii) provide future working ~~capital for Schaublin, our foreign subsidiary.~~capital. The Foreign Credit Agreements ~~provide (a) the Foreign Term Loan,~~provided Schaublin with a CHF 15.0 million (approximately $15.4 million) term loan (the “Foreign Term Loan”), which ~~expires on July 31, 2024,~~was extinguished in February 2022 and ~~(b) the Foreign Revolver,~~ a CHF 15.0 million (approximately $15.4 million) revolving credit facility (the “Foreign Revolver”), which ~~continues in effect until~~was terminated by either Schaublin or Credit Suisse. Debt issuance costs associated with the Foreign Credit Agreements totaled CHF 0.3 million (approximately $0.3 million) and will be amortized throughout the life of the Foreign Credit Agreements. Asas of October ~~2, 2021, approximately $0.1 million in unamortized debt issuance costs remain.~~1, 2022.

Amounts outstanding under the Foreign Term Loan and the Foreign Revolver generally bear interest at LIBOR plus a specified margin. The applicable margin is based on Schaublin’s ratio of total net debt to consolidated EBITDA at each measurement date. Currently, Schaublin’s margin is 1.00%.

The Foreign Credit Agreements require Schaublin to comply with various covenants, which are tested annually on March 31. These covenants include, among other things, a financial covenant to maintain a ratio of consolidated net debt to adjusted EBITDA not greater than 2.50 to 1 as of March 31, 2021 and thereafter. Schaublin is also required to maintain an economic equity of CHF 20.0 million at all times. The Foreign Credit Agreements allow Schaublin to, among other things, incur other debt or liens and acquire or dispose of assets provided that Schaublin complies with certain requirements and limitations of the Foreign Credit Agreements. As of October 2, 2021, Schaublin was in compliance with all such covenants.

As of October 2, 2021, there was approximately $3.1 million outstanding under the Foreign Term Loan and no amounts outstanding under the Foreign Revolver. Schaublin has the ability to borrow up to an additional $16.1 million under the Foreign Revolver as of October 2, 2021.

~~Schaublin’s required future principal payments are approximately $0 for the remainder of fiscal 2022, $0 for fiscal 2023 and fiscal 2024 and $3.1 million for fiscal 2025.~~

~~Other Notes Payable~~

In 2012 Schaublin purchased the land and building that it occupies for approximately $14.9 million. Schaublin obtained a 20-year fixed-rate mortgage of approximately $9.9 million at an interest rate of 2.9%. The balance of the purchase price of approximately $5.0 million was paid from cash on hand. The balance on this mortgage as of October 2, 2021 was approximately $5.5 million and has been classified as Level 2 of the valuation hierarchy.

The Company’s required future principal payments are approximately $0.3 million for the remainder of fiscal 2022, $0.5 million for each year from fiscal 2023 through fiscal 2026 and $3.2 million thereafter.

~~On October 7, 2021, RBCA issued $500.0 million aggregate principal amount of 4.375% Senior Notes due 2029 (the “Notes”).~~

Cash Flows

Six-month Period Ended October ~~2, 2021~~1, 2022 Compared to the Six-month Period Ended ~~September 26, 2020~~October 2, 2021

The following table summarizes our cash flow activities:

FY22 FY21 $
Change
Net cash provided by (used in):
Operating activities $ 93.5 $ 74.5 $ 19.0
Investing activities 83.6 (5.8 ) 89.4
Financing activities 1,020.3 (5.5 ) 1,025.8
Effect of exchange rate changes on cash 0.1 (0.1 ) 0.2
Increase in cash and cash equivalents $ 1,197.5 $ 63.1 $ 1,134.4

	FY23			FY22		$ Change
Net cash provided by/(used in):
Operating activities ..	$	88.4		$	93.5	$	(5.1	)
Investing activities		0.4			83.6		(83.2	)
Financing activities		(179.9	)		1,020.3		(1,200.2	)
Effect of exchange rate changes on cash		(3.3	)		0.1		(3.4	)
Increase/(decrease) in cash and cash equivalents	$	(94.4	)	$	1,197.5	$	(1,291.9	)

During the first six months of fiscal ~~2022,~~2023, we generated cash of ~~$93.5~~$88.4 million from operating activities compared to ~~$74.5~~$93.5 million of cash generated during the same period of fiscal ~~2021.~~2022. The ~~increase~~decrease of ~~$19.0~~$5.1 million for fiscal ~~2022~~2023 was mainly a result of the ~~favorable~~unfavorable impact of a net change in operating assets and liabilities of ~~$14.0~~$66.9 million, ~~and~~partially offset by a favorable change in non-cash ~~charges~~activity of ~~$15.2~~$3.2 million ~~offset by a decrease~~and an increase in net income of ~~$10.2~~$58.6 million. The ~~favorable~~unfavorable change in operating assets and liabilities is detailed in the table below, while the increase in non-cash charges resulted from ~~$15.5~~a $40.2 million increase in depreciation and amortization, partially offset by unfavorable changes of $15.8 million of share-based compensation charges, $11.3 million of amortization of deferred financing costs, ~~$1.3 million of share-based compensation charges, and $0.3 million of amortization of intangible assets, partially offset by unfavorable changes of $1.1~~$7.8 million in deferred taxes, ~~$0.3~~and $2.1 million of ~~depreciation,~~consolidation, restructuring, and ~~$0.5 million of loss on disposition of assets.~~other noncash charges.

The following chart summarizes the ~~favorable~~unfavorable change in operating assets and liabilities of $66.9 million for fiscal 2023 versus fiscal 2022 and the favorable change of $14.0 million for fiscal 2022 versus fiscal ~~2021 and the favorable change of $20.1 million for fiscal 2021 versus fiscal 2020.~~2021.

	FY22			FY21			FY23			FY22
Cash provided by (used in):
Cash provided by/(used in):
Accounts receivable	$	(20.6	)	$	19.0		$	8.6		$	(20.6	)
Inventory		(2.2	)		8.1			(38.0	)		(2.2	)
Prepaid expenses and other current assets		(9.3	)		2.8			(0.9	)		(9.3	)
Other noncurrent assets		5.6			(5.1	)		6.5			5.6
Accounts payable		22.8			(12.2	)		(19.9	)		22.8
Accrued expenses and other current liabilities		18.1			1.6			(11.6	)		18.1
Other noncurrent liabilities		(0.4	)		5.9			(11.6	)		(0.4	)
Total change in operating assets and liabilities:	$	14.0		$	20.1		$	(66.9	)	$	14.0

During the first six months of fiscal ~~2022,~~2023, we generated ~~$83.6~~$0.4 million ~~for~~in investing activities as compared to ~~$5.8~~generating $83.6 million ~~used~~ during the first six months of fiscal ~~2021.~~2022. This ~~increase~~decrease in cash generated was attributable to ~~the~~$120.5 million less in proceeds from sale of ~~$120.5 million of highly liquid~~ marketable securities ~~during the current period, partially offset by the purchase of $29.9 million of highly liquid marketable securities during the current period, a $0.9 million~~and an increase in capital expenditures of $16.2 million, partially offset by a $30.0 million decrease in purchases of marketable securities, $0.5 million increase in proceeds from the sale of assets and aDodge acquisition purchase price ~~adjustment in fiscal 2021 related to the Swiss Tool acquisition~~adjustments of ~~$0.3~~$23.0 million.

During the first six months of fiscal ~~2022,~~2023, we ~~generated $1,020.3~~used $179.9 million ~~for~~in financing activities compared to ~~$5.5~~$1,020.3 million ~~used~~generated during the first six months of fiscal ~~2021.~~2022. This ~~increase in~~decrease from cash generated to cash used was primarily attributable to $605.7 million proceeds ~~received~~ from the issuance of common stock during

the ~~current period,~~first six months of fiscal 2022, $445.5 million proceeds ~~received~~ from the issuance of preferred stock during the ~~current period, and $14.4~~first six months of fiscal 2022, $161.1 million more payments made on outstanding debt, $11.5 million cash dividends paid on preferred stock, $6.8 million fewer exercises of share-based awards, and $2.2 million in principal payments made on finance lease obligations during the current fiscal year, partially offset by $32.2 million ofless in finance fees paid in connection with credit facilities and term loans ~~in the current period, $5.6~~and $0.4 million ~~more payments made on outstanding debt and $2.0 million more treasury stock purchases.~~fewer repurchases of common stock.

Capital Expenditures

Our capital expenditures were ~~$3.5~~$15.2 million and ~~$6.9~~$23.1 million for the three- and six-month periods ended October ~~2, 2021,~~1, 2022, respectively. We expect to make additional capital expenditures of ~~$10.0~~$15.0 million to ~~$15.0~~$20.0 million during the remainder of fiscal ~~2022~~2023 in connection with our existing ~~business, excluding capital expenditures we may incur related to the acquisition of Dodge.~~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.

Obligations and Commitments

The Company’s fixed contractual obligations and commitments are primarily comprised of our debt obligations disclosed in Part I, Item 1- Note 10 of this report. We also have lease obligations which are materially consistent with what we disclosed in our Form 10-K/A for the fiscal year ended April 2, 2022.

Other Matters

Critical Accounting Policies and Estimates

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,~~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 fiscal ~~2021~~2022 Annual Report on Form ~~10-K~~10-K/A describe the significant accounting estimates and policies used in preparation of ~~the Consolidated Financial Statements.~~our consolidated financial statements. Actual results in these areas could differ from management’s estimates. There have been no significant changes in our critical accounting estimates during the first six months of fiscal ~~2022 other than the following:~~

~~Valuation of Business Combinations~~

We allocate the amounts we pay for each acquisition to the assets we acquire and liabilities we assume based on their fair values at the date of acquisition, including identifiable intangible assets, which either arise from a contractual or legal right or are separable from goodwill. We base the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use. We allocate to goodwill any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired. Transaction costs associated with these acquisitions are expensed as incurred through other, net on the consolidated statements of operations.2023.

Off-Balance Sheet Arrangements

As of October ~~2, 2021,~~1, 2022, we had no significant off-balance sheet arrangements other than ~~$3.6~~$3.7 million of outstanding standby letters of credit, all of which were under the ~~Revolver.~~Revolving Credit Facility.

~~ITEM~~Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks, which arise during the normal course of business from changes in interest rates and foreign currency exchange rates.

Interest Rates. We currently have variable rate debt outstanding under ~~our credit agreements.~~the Term Loan Facility. We regularly evaluate the impact of interest rate changes on our net income and cash flow and take action to limit our exposure when appropriate. As discussed in Note 14 in Part I, Item I of this report, we entered into an interest rate swap on October 28, 2022.

Foreign Currency Exchange Rates. Our ~~Swiss~~ operations in the following countries utilize the ~~Swiss franc~~following currencies as ~~the~~their functional ~~currency, our French and German operations utilize the euro as the functional currency and our Polish operations utilize the Polish zloty as the functional currency.~~ currency:

	● Australia – Australian dollar	● India – rupee
	● Canada – Canadian dollar	● Mexico – peso
	● China – Chinese yuan	● Poland – zloty
	● France – euro	● Switzerland – Swiss franc
	● Germany – euro

As a result, we are exposed to risk associated with fluctuating currency exchange rates between the U.S. dollar and these currencies. Foreign currency transaction gains and losses are included in earnings. Approximately 9%12% of our net sales were impacted by foreign currency fluctuations for both the three- and six-month periods ended October ~~2, 2021~~1, 2022, compared to 8%9% for both the three- and six-month periods ended ~~September 26, 2020.~~October 2, 2021. Foreign currency transaction exposure arises primarily from the transfer of foreign currency from one subsidiary to another within the group, and to foreign currency denominated trade receivables. Unrealized currency translation gains and losses are recognized upon translation of the foreign operations’ balance sheets to U.S. dollars. Because our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, an impact on our earnings. We periodically enter into derivative financial instruments in the form of forward exchange contracts to reduce the effect of fluctuations in exchange rates on certain third-party sales transactions denominated in non-functional currencies. Based on the accounting guidance related to derivatives and hedging activities, we record derivative financial instruments at fair value. For derivative financial instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income, and is reclassified into earnings when the hedged transaction affects earnings. As of October ~~2, 2021,~~1, 2022, we had no derivatives. As discussed in Note 14 in Part I, Item I of this report, we entered into an interest rate swap on October 28, 2022.

~~ITEM~~Item 4. Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of ~~1934 (the “Exchange Act”))~~1934) as of October ~~2, 2021. Based~~1, 2022. This evaluation excluded the Dodge business acquired on ~~this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that,~~November 1, 2021 as we are currently in the process of ~~October 2, 2021, our disclosure~~integrating the internal controls and procedures ~~were (1) designed~~of Dodge into our internal controls over financial reporting. As provided under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the SEC, we will include the internal controls and procedures of Dodge in our annual assessment of the effectiveness of internal control over financial reporting for our 2023 fiscal year.

Remediation of Material Weakness

To address the previously reported material weakness in internal control over financial reporting described in Part I, Item 4 of the Company’s Form 10-Q for the quarterly period ended July 2, 2022, the Company enhanced and revised the design of existing controls and procedures to properly review employment agreements involving equity awards to ensure that information relating to our Company required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported to our Chief Executive Officer and Chief Financial Officer within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission, and (2) effective, in that they ~~provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements~~are accounted for ~~external purposes~~ in accordance with ~~generally accepted~~the latest accounting ~~principles.~~pronouncements. The Company’s internal audit department will test the operating effectiveness of management’s controls during the fiscal year.

Changes in Internal Control over Financial Reporting

NoExcept for the changes related to the Company's remediation efforts described above, there has been no change in ~~our~~the Company’s internal control over financial reporting that occurred during the ~~three-month period ended October 2, 2021~~second quarter of fiscal 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange ~~Act)~~Act of 1934).

As discussed in Note 13 included in Part I, Item 1 of this report, we acquired Dodge on November 1, 2021. We are currently in the process of integrating the internal controls and procedures of Dodge into our internal controls over financial reporting. As provided under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the SEC, we will include the internal controls and procedures of Dodge in our annual assessment of the effectiveness of our internal control over financial reporting for our 2023 fiscal year.

PART II - OTHER INFORMATION

~~PART II - OTHER INFORMATION~~

~~ITEM~~Item 1. Legal Proceedings

From time to time, we are involved in litigation and administrative proceedings, which arise in the ordinary course of our business. We do not believe that any litigation or proceeding in which we are currently involved, either individually or in the aggregate, is likely to have a material adverse effect on our business, financial condition, operating results, cash flow or prospects.

~~ITEM~~Item 1A. Risk Factors

There have been no material changes to our risk factors and uncertainties since the ~~most recent~~ filing of our Form ~~10-K, besides those noted below.~~10-K/A filed with the SEC on August 5, 2022. For a discussion of the risk factors, refer to Part I, Item 2, “Cautionary Statement as to Forward-Looking Information” contained in this quarterly report and Part I, Item 1A, “Risk Factors,” contained in the Company’s Annual Report on Form ~~10-K~~10-K/A for the fiscal year ended April ~~3, 2021.~~2, 2022.

~~Quarterly performance can be affected by the timing of government product inspections and approvals.~~

A portion of our quarterly 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.

~~We may fail to realize some or all of the anticipated benefits of the Dodge Acquisition or those benefits may take longer to realize than expected.~~

We believe that there are significant benefits and synergies to be realized through leveraging the products, scale and combined enterprise customer bases of RBC and Dodge. However, the efforts to realize these benefits and synergies will be a complex process and may disrupt both companies’ existing operations if not implemented in a timely and efficient manner. The full benefits of the Dodge acquisition, including any anticipated sales or growth opportunities, may not be realized as expected or may not be achieved within the time frames we anticipate, or at all. Any data on the expected synergies from the Dodge acquisition included in the unaudited pro forma condensed combined financial information that was included in our Current Report on Form 8-K filed with the SEC on September 20, 2021 is based on various adjustments, assumptions and preliminary estimates. Such data have not been prepared, reviewed or analyzed by a third-party and may not be an accurate indication of the actual synergies we will realize, if any, from the Dodge acquisition and the integration of Dodge into our business. Failure to achieve the anticipated benefits of the acquisition could adversely affect our results of operations or cash flows.

~~We may not be able to efficiently integrate Dodge into our operations.~~

The future success of the Dodge acquisition, including its anticipated benefits and cost savings, depends, in part, on our ability to optimize our operations and integrate Dodge, its systems, operations and personnel into our existing business. These activities will require time and involve dedication of various resources of the Company that would otherwise be dedicated to our existing operations. These integration efforts may accordingly adversely affect our other operations to the extent such efforts take resources or attention away from our other operations. If we experience difficulties in the integration process, the anticipated benefits of the Dodge acquisition may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on us for an undetermined period. There can be no assurance that we will realize the operational or financial gains from the Dodge acquisition that we anticipated when originally determining to acquire Dodge.

~~Additional challenges, risks and uncertainties we may encounter as part of the integration process include the following:~~

●

~~we may face significant costs of integration and compliance with any laws or regulations applicable to Dodge or our combined company;~~

●

~~we may experience delays in the integration of management teams, strategies, operations, products and services;~~

●

~~there may be differences in business backgrounds, corporate cultures and management philosophies that may delay the successful integration of Dodge’s management personnel into our operations;~~

●

~~we may be unable to retain key Dodge employees;~~

●

~~we may not be able to create and enforce uniform standards, controls, procedures, policies and information systems across our combined company;~~

●

we may face challenges in integrating complex systems, technology, networks and other assets of Dodge into our operations in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;

●

~~there may be potential unknown liabilities and unforeseen increased expenses associated with the Dodge acquisition, including costs to integrate Dodge beyond current estimates; and~~

●

~~we may experience disruptions of, or the loss of momentum in, our or Dodge’s ongoing businesses or inconsistencies in standards, controls, procedures and policies.~~

Any of these factors could adversely affect our or Dodge’s ability to maintain relationships with customers, suppliers, employees and other constituencies or our ability to achieve the anticipated benefits of the Dodge acquisition, which could reduce earnings or otherwise adversely affect our business and financial results.

~~We incurred substantial debt in order to complete the Dodge acquisition, which could constrain our business and exposes us to the risk of defaults under our debt instruments.~~

As of November 1, 2021, we had approximately $1,800.0 million of total debt as a result of the completion of the Dodge acquisition. 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 including for strategic acquisitions, working capital, capital expenditures, and general corporate purposes;

●

~~our flexibility in planning for and reacting to changes in our business, the competitive landscape and the markets in which we operate may be limited; and~~

●

~~we may be placed at a competitive disadvantage relative to other companies in our industry with less debt or comparable debt on more favorable terms.~~

Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our financial and operating performance and no assurance can be given that our business will generate sufficient cash flow to service our debt.

Additionally, 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 the New Credit Agreement and the indenture that governs the Notes, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our prospects, business, financial condition, results of operations and cash flows could be materially and adversely affected and could cause us to become bankrupt or otherwise insolvent. In addition, these covenants may restrict our ability to engage in transactions that we believe would otherwise be in the best interests of our business and stockholders.

~~Increases in interest rates would increase the cost of servicing Term Loan Facility and could reduce our profitability.~~

The $1,300.0 million outstanding under the Term Loan Facility bears interest at a variable rate. As a result, increases in interest rates would increase the cost of servicing the Term Loan Facility, and could materially reduce our profitability and cash flows. We have not entered into interest rate cap agreements on the Term Loan Facility. In addition, a transition away from the London Interbank Offered Rate (LIBOR) as a benchmark for establishing the applicable interest rate may affect the cost of servicing the Term Loan Facility. The Financial Conduct Authority of the United Kingdom has announced that it plans to no longer persuade or compel banks to submit rates for the calculation of LIBOR by the end of calendar year 2021. Although the Term Loan Facility provides for alternative base rates, such alternative base rates may or may not be related to LIBOR, and the consequences of the phase–out of LIBOR cannot be entirely predicted at this time.

~~ITEM~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds

Not applicable.

Issuer Purchases of Equity Securities

In 2019, our Board of Directors authorized us to repurchase up to $100.0 million of our common stock from time to time on the open market, in block trade transactions, and through privately negotiated transactions, in compliance with SEC Rule 10b-18 depending on market conditions, alternative uses of capital, and other relevant factors. Purchases may be commenced, suspended, or discontinued at any time without prior notice.

Total share repurchases under the 2019 plan for the three months ended October ~~2, 2021~~1, 2022 are as follows:

Period	Total number of shares purchased		Average price paid per share		Number of shares purchased as part of the publicly announced program		Approximate dollar value of shares still available to be purchased under the program (000’s)
07/03/2022 – 07/30/2022		—	$	—		—	$	73,069
07/31/2022 – 08/27/2022		63		236.00		63		73,054
08/28/2022 – 10/01/2022		—		—		—	$	73,054
Total		63	$	236.00		63

Period Total number
of shares purchased Average price paid
per share Number of
shares
purchased
as part of the
publicly
announced
program Approximate
dollar value
of shares
still available
to be purchased
under the
program (000’s)
07/04/2021 – 07/31/2021 — $ — — $ 81,315
08/01/2021 – 08/28/2021 406 226.86 406 81,223
08/29/2021 – 10/02/2021 — — — $ 81,223
Total 406 $ 226.86 406

During the second quarter of fiscal 2023, we did not issue any common stock that was not registered under the Securities Act of 1933.

~~ITEM~~Item 3. Defaults Upon Senior Securities

Not applicable.

~~ITEM~~Item 4. Mine Safety Disclosures

Not applicable.

~~ITEM~~Item 5. Other Information

Not applicable.

~~ITEM~~Item 6. Exhibits

Exhibit Number		Exhibit Description
31.01		Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
31.02		Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
32.01		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
32.02		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

This certification accompanies this Quarterly Report on Form 10-Q, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

RBC Bearings Incorporated
		(Registrant)

By:	/s/ Michael J. Hartnett
	Name:	Michael J. Hartnett
	Title:	Chief Executive Officer
	Date:	November ~~12, 2021~~10, 2022

By:	/s/ Robert M. Sullivan
	Name:	Robert M. Sullivan
	Title:	Chief Financial Officer
	Date:	November ~~12, 2021~~10, 2022

EXHIBIT INDEX

Exhibit Number		Exhibit Description
31.01		Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
31.02		Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
32.01		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
32.02		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

4037

iso4217:USD xbrli:shares

	Three Months Ended
	October 2, 2021						September 26, 2020
	Aerospace		Industrial		Total		Aerospace		Industrial		Total
Plain	$	49,503	$	24,576	$	74,079	$	51,040	$	20,013	$	71,053
Roller		8,892		18,417		27,309		10,674		10,905		21,579
Ball		8,027		16,404		24,431		7,311		13,788		21,099
Engineered Products		16,860		18,221		35,081		18,116		14,488		32,604
	$	83,282	$	77,618	$	160,900	$	87,141	$	59,194	$	146,335

Period	Total number of shares purchased		Average price paid per share		Number of shares purchased as part of the publicly announced program		Approximate dollar value of shares still available to be purchased under the program (000’s)
07/04/2021 – 07/31/2021		—	$	—		—	$	81,315
08/01/2021 – 08/28/2021		406		226.86		406		81,223
08/29/2021 – 10/02/2021		—		—		—	$	81,223
Total		406	$	226.86		406