RBC Bearings INC (RBC)

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The financial and business
analysis below provides information that we believe is relevant to an assessment and understanding of our consolidated financial position,
results of operations and cash flows. This financial and business analysis should be read in conjunction with the consolidated financial
statements and related notes. All references to “Notes” in this Item 7 refer to the “Notes to Consolidated Financial
Statements” included in Item 8 of this Annual Report on Form 10-K.

The following discussion contains statements reflecting
our views about our future performance that constitute “forward-looking statements” within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. See the information provided in Part I, Item 1A. “Risk
Factors” of this Annual Report on Form 10-K under the heading “Cautionary Statement as to Forward-Looking Information.”

General

We are a well-known international manufacturer of
highly engineered precision bearings, components and essential systems for the aerospace, defense and industrial industries. Our precision
solutions are integral to the manufacture and operation of most machines and mechanical systems, reduce wear to moving parts, facilitate
proper power transmission, and reduce damage and energy loss caused by friction. While we manufacture products in all major bearing categories,
we focus primarily on the higher end of the bearing market where we believe our value-added manufacturing and engineering capabilities
enable us to differentiate ourselves from our competitors and enhance profitability. We believe our unique expertise has enabled us to
garner leading positions in many of the product markets in which we primarily compete. With 54 facilities in 11 countries, of which 38
are manufacturing facilities, we have been able to significantly broaden our end markets, products, customer base and geographic reach.
We have a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy, fiscal 2025
had 52 weeks and fiscal 2024 had 52 weeks.

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

We use gross margin as the primary measurement to
assess the financial performance of each reportable segment. End market and channel sales within our segments are based on internal definitions
and metrics considered by management and are periodically reviewed and updated prospectively. For fiscal year 2024, we estimate approximately
$6.9 of sales classified as industrial distribution for fiscal year 2024 would now be classified as industrial OEM. Fiscal year 2024 was
not recast to reflect this change.

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/Defense and 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 highly engineered bearings and precision components through the following
efforts:

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We have demonstrated expertise in acquiring
and integrating bearing and precision engineered component manufacturers that have complementary products or distribution channels and
have provided significant margin enhancement. We have consistently increased the profitability of acquired businesses through a process
of methods and systems improvement coupled with the introduction of complementary and proprietary new products. Since 1992 we have completed
29 acquisitions, which have broadened our end markets, products, customer base and geographic reach.

Outlook

For the fiscal year ended
March 29, 2025, 63.8% of our net sales were attributable to the Industrial segment while the Aerospace/Defense segment contributed 36.2% of our net sales. Our net sales increased 4.9% year over year due to an increase of 14.1% in Aerospace and Defense
segment sales and a 0.2% increase in Industrial segment sales.

Aerospace and Defense segment
sales increased 14.1% year over year. Commercial aerospace increased 13.3%, demonstrating the continued recovery and early stages of a
growth cycle. Defense sales, which represent approximately 32.4% of segment sales during the year, were up 15.9% for the year. Our backlog
in this market is significant and deliveries are expected to continue to grow in the coming years.

Industrial segment sales increase
0.2% year over year, led by a 1.4% increase in distribution and aftermarket sales. Sales to OEMs were down 2.1% year over year,
primarily driven by softness in the energy and semicon markets.

For the fourth quarter
of fiscal 2025, 64.1% of our net sales was attributable to the Industrial segment compared to approximately 35.9% for the
Aerospace/Defense segment. Approximately $191.5 of Industrial segment sales in the fourth quarter of fiscal 2025 were to
distribution and aftermarket compared to approximately $186.8 in the prior year while approximately $88.9 were made directly to OEMs
in the fourth quarter of fiscal 2025 compared to approximately $84.5 in the prior year. Net sales in the Aerospace/Defense segment
increased $14.9, or 10.6%, for the fourth quarter of fiscal 2025 compared to the same period last fiscal year. Commercial aerospace
net sales, which consisted of $85.9 of OEM and $23.3 of distribution and aftermarket, increased by 11.6% compared to the fourth quarter of
fiscal 2024 when OEM net sales were $78.2 and distribution and aftermarket net sales were $19.7. This was driven by a continuing
recovery as build rates and orders grew in the OEM market and aftermarket demand remained strong. Our defense markets net sales,
which consisted of $38.1 of OEM and $10.0 of distribution and aftermarket, increased 8.2% compared to the fourth quarter of
fiscal 2024 when OEM net sales were $34.2 and distribution and aftermarket net sales were $10.3.

The Company forecasts net
sales to be approximately $424.0 to $434.0 in the first quarter of fiscal 2026, compared to $406.3 in the first quarter of fiscal 2025,
which represents a growth rate of 4.4% to 6.8%.

Our backlog as of March 29,
2025 was $940.7 compared to $821.5 as of March 30, 2024. This increase reflects continued growth, most notably in our commercial aerospace
and marine defense end markets

We experienced solid operating cash flow
generation during fiscal 2025 (as discussed in the “Liquidity and Capital Resources” section below). We believe that operating
cash flows and available credit under our revolving bank credit facilities will provide adequate resources to fund internal growth initiatives
for the foreseeable future, including at least the next 12 months. As of March 29, 2025, we had cash of $36.8, of which, $23.7 was cash
held by our foreign operations.

Sources of Revenue

A contract with a customer
exists when there is commitment and approval from both parties involved, the rights of the parties are identified, payment terms are defined,
the contract has commercial substance and collectability of consideration is probable. The Company has determined that the contract with
the customer is established when the customer purchase order is accepted or acknowledged. Long-term agreements (“LTAs”) are
used by the Company and certain of its customers to reduce their supply uncertainty for a period of time, typically multiple years. While
these LTAs define commercial terms including pricing, termination rights and other contractual requirements, they do not represent the
contract with the customer for revenue recognition purposes.

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Approximately 98% of the Company’s
revenue was generated from the sale of products to customers in the Industrial and Aerospace/Defense markets for each of the years ended
March 29, 2025 and March 30, 2024. The remaining 2% of the Company’s revenue for each of the last two fiscal years was derived from
services performed for customers, which included repair and refurbishment work performed on customer-controlled assets as well as design
and test work.

Refer to Note 2 for further
discussion regarding the Company’s revenue policy.

Cost of Sales

Cost of sales includes employee
compensation and benefits, raw materials, outside processing, depreciation of manufacturing machinery and equipment, supplies and manufacturing
overhead.

Less than half of our factory
costs, depending on product mix, are attributable to raw materials, purchased components and outside processing. When we experience raw
material inflation, we attempt to offset these cost increases by changing our buying patterns, expanding our vendor network and passing
through price increases when possible. Although we experienced cost inflation on raw material, labor and overhead for this fiscal year,
we were able to mitigate it through pricing and strategic sourcing efforts.

We monitor gross margin performance
through a process of monthly operation reviews with all our divisions. We develop new products to target certain markets allied to our
strategies by first understanding volume levels and product pricing and then constructing manufacturing strategies to achieve defined
margin objectives. We only pursue product lines where we believe that the developed manufacturing process will yield the targeted margins.
Management monitors gross margins of all product lines on a monthly basis to determine which manufacturing processes or prices should
be adjusted.

Fiscal 2025 Compared to Fiscal 2024

Results of Operations

(amounts in millions, except share and per
share data)

Net sales for the fiscal
year ended March 29, 2025 increased $76.0, or 4.9%, compared to fiscal 2024. This increase was the result of a 0.2% increase in our
Industrial segment, while net sales in our Aerospace/Defense segment increased 14.1% year over year. Industrial segment sales experienced the strongest contribution to
growth in the metals and mining, warehousing and logistics, and food and beverage markets. Within Aerospace/Defense, total commercial
aerospace net sales increased 13.3% and defense net sales increased 15.9% year over year. The commercial aerospace increase reflects the
continued recovery in the market over the last year.

Net income attributable to
common stockholders increased by $46.9 to $233.8 for fiscal 2025 compared to fiscal 2024. The net income attributable to common stockholders
of $233.8 in fiscal 2025 was impacted by $1.5 of restructuring and consolidation charges, $59.8 of interest expense, $12.4 of
preferred stock dividends, and $65.7 of income tax expense. The net income attributable to common stockholders of $186.9 in fiscal 2024
was impacted by $3.0 of restructuring and consolidation charges, $78.7 of interest expense, $23.0 of preferred stock dividends,
and $51.9 of income tax expense.

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Gross Margin

Gross margin was 44.4%
of sales for fiscal 2025 compared to 43.0% for the same period last year. Gross margin of $670.5 in fiscal 2024 included $0.3 of
inventory rationalization costs associated with consolidation efforts at one of our facilities located in California. The expansion
in margin during fiscal 2025 reflects the combination of product mix, pricing and continued cost efficiencies and synergies achieved
through integration.

Selling, General and Administrative

SG&A expenses increased
by $25.8 to $279.3 for fiscal 2025 compared to fiscal 2024. The increase in SG&A was primarily driven by personnel costs, IT costs
and other professional fees.

Other, Net

Other operating expenses for
fiscal 2025 totaled $76.9 compared to $74.8 for fiscal 2024. For fiscal 2025, other operating costs consisted primarily of $71.8 of amortization
expense, $1.5 of plant consolidation and restructuring costs, $1.2 of bad debt expense and $2.4 of other items. For fiscal 2024, other
operating expenses consisted primarily of $70.4 of amortization expense, $2.7 of plant consolidation and restructuring costs, $0.2 of
bad debt expense, $0.3 of acquisition costs, $0.6 of losses on disposal of assets, and $0.6 of other items.

Interest Expense, Net

Interest expense, net, consists
of interest charged on the Company’s debt agreements and amortization of deferred financing fees, offset by interest income. Interest
expense, net was $59.8 for fiscal 2025 compared to $78.7 for fiscal 2024. The decrease in interest expense is primarily related to our
debt reduction efforts, as well as the Interest Rate Swap and the Cross Currency Swap, which have enabled us to manage interest costs.

Other Non-Operating (Income)/Expense

Other non-operating income
for fiscal 2025 totaled $1.8, consisting primarily of a $4.0 legal settlement partially offset by post-retirement benefit costs and foreign
exchange gains and losses. Non-operating costs incurred during fiscal 2024 were $1.7, consisting primarily of post-retirement benefit
costs.

Income Taxes

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Income tax expense for fiscal
2025 was $65.7 compared to $51.9 for fiscal 2024. Our effective income tax rate for fiscal 2025 was 21.1% compared to 19.8% for fiscal
2024. The effective income tax rates are different from the U.S. statutory rate due to the U.S. credits for increasing research activities
and foreign-derived intangible income provision, which decrease the rate, and differences in foreign and state income taxes, which increase
the rate. The effective income tax rate for fiscal 2025 of 21.1% included discrete items totaling a benefit of $7.6 which is substantially
related to a benefit associated with stock-based compensation, a reduction in unrecognized tax benefits due to the expiration of the statute
of limitations, and benefits related to the release of a valuation allowance and an adjustment related to state remeasurements. The effective
income tax rate for fiscal 2025 without these discrete items would have been 23.5%. The effective income tax rate for fiscal 2024 of 19.8%
included discrete items totaling a benefit of $8.2 which is substantially related to a benefit associated with stock-based compensation,
a reduction in unrecognized tax benefits due to the expiration of the statute of limitations, and the accrual of deferred tax assets related
to state tax modifications. The effective income tax rate for fiscal 2024 without these discrete items would have been 22.9%.

Global Minimum Tax

In October 2021, the Organisation
for Economic Co-operation and Development (“OECD”) announced an Inclusive Framework on Base Erosion and Profit Shifting including
Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum
rate of 15%. Subsequently multiple sets of administrative guidance have been issued. Many non-US tax jurisdictions have either recently
enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 with the adoption of additional components
in later years or announced their plans to enact legislation in future years. The Company has performed an assessment of the potential
impact to its income taxes as a result of Pillar Two. Based on the results of the assessment, the Company believes that it can avail itself
of the transitional safe harbor rules in all jurisdictions in which the Company operates. We will continue to monitor both the U.S. and
international legislative developments related to Pillar Two to assess for any potential impacts. We are continuing to evaluate the impacts
of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions in which we operate.

Segment Information

We report our financial results
under two operating segments: Aerospace/Defense and Industrial. We use gross margin as the primary measurement to assess the financial
performance of each reportable segment.

Aerospace/Defense Segment:

Net sales increased
$73.4, or 14.1%, for fiscal 2025 compared to fiscal 2024. Commercial aerospace net sales, which consisted of $317.8 of OEM and $83.1 of
distribution and aftermarket, increased by 13.3% compared to fiscal 2024 when OEM net sales were $278.5 and distribution and
aftermarket net sales were $75.3. This was driven by a continuing recovery as build rates and orders grew in the OEM markets
and aftermarket demand remained strong. Our defense markets net sales, which consisted of $146.3 of OEM and $45.6 of distribution and
aftermarket, increased by 15.9% compared to fiscal 2024 when OEM net sales were $135.3 and distribution and aftermarket net sales
were $30.3.

Our backlog and recent
results reflect continued growth in demand which we expect to continue in upcoming quarters. Our defense markets, which represented
about 32.4% of sales, increased by approximately 15.9% during the period, driven by increased sales and order volume in the marine, fixed wing, and missiles and guided munitions end markets. Distribution and aftermarket sales, which represent 21.7% of segment sales, were up 21.7% year
over year.

Gross margin was $243.1,
or 41.0% of net sales, in fiscal 2025 compared to $208.8, or 40.2% of sales, for the same period in fiscal 2024. We anticipate
additional margin expansion in the upcoming year as the growing orders for commercial products are expected to increase volumes
flowing through our manufacturing facilities driving cost efficiencies.

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Industrial Segment:

Net sales increased $2.6,
or 0.2%, during fiscal 2025 compared to the same period last year. The continued strong performance was driven by the mining and general
industrial markets. Sales to distribution and the aftermarket were $717.4 in fiscal 2025 compared to $707.6 in the prior year, a 1.4%
year over year increase. OEM sales were $326.1 for fiscal 2025 compared to $333.3 in the prior year. The 2.1% decrease in OEM sales compared
to the prior year was primarily due to softness in the machinery, oil and gas, and semiconductor equipment end markets.

Gross margin was $483.0, or
46.3% of net sales, in fiscal 2025 compared to $461.7, or 44.4% of sales, for the same period in fiscal 2024. The expansion in margin
year over year was attributable to manufacturing efficiencies and product mix.

Corporate:

Corporate SG&A for
fiscal 2025 increased $17.3 or 20.8% compared to fiscal 2024 due to increased spending in IT and personnel-related
costs. As a percentage of net sales, Corporate SG&A was relatively flat year over year.

Liquidity and Capital Resources

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. 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 our revolving bank credit facilities will provide adequate resources to fund internal growth initiatives for
the foreseeable future.

Our ability to meet future
working capital, capital expenditures 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, relocate, 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 March 29, 2025, we
had cash of $36.8, of which, approximately $23.7 was cash held by our foreign operations. We expect that our undistributed foreign
earnings will be re-invested indefinitely for working capital, internal growth and acquisitions for and by our foreign subsidiaries,
with the exception of our Canadian operations as there are no current plans to expand on the sales operations within that jurisdiction. As discussed in further detail below, we also have the ability to borrow money from
our existing credit facilities.

Domestic Credit Facility

In fiscal 2022, RBC Bearings
Incorporated, our top holding company, and our Roller Bearing Company of America, Inc. subsidiary (“RBCA”) entered into a
Credit Agreement (the “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. The Credit Agreement provides
the Company with (a) a $1,300.0 term loan (the “Term Loan”), which was used to fund a portion of the cash purchase price for
the acquisition of Dodge Industrial and to pay related fees and expenses, and (b) a $500.0 revolving credit facility (the “Revolving
Credit Facility” and together with the Term Loan, the “Facilities”). Debt issuance costs associated with the Credit
Agreement totaled $14.9 and are being amortized over the life of the Credit Agreement.

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Amounts outstanding under
the Facilities generally bear interest at either, at the Company’s option, (a) a base rate determined by reference to the higher
of (i) Wells Fargo’s prime lending rate, (ii) the federal funds effective rate plus 0.50% and (iii) Term SOFR (as defined in the
Credit Agreement based on SOFR, the secured overnight financing rate administered by the Federal Reserve Bank of New York) plus 1.00%
or (b) Term SOFR plus a credit spread adjustment of 0.10% plus a margin ranging from 0.75% to 2.00% depending on the Company’s consolidated
ratio of total net debt to consolidated EBITDA (as defined within the Credit Agreement) from time to time. The Facilities are subject
to a SOFR floor of 0.00%. As of March 29, 2025, the Company’s margin was 1.00% for SOFR loans, the commitment fee rate was 0.175%,
and the letter of credit fee rate was 1.00%. A portion of the Term Loan is subject to a fixed-rate interest swap as discussed in Note
12.

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

The Credit Agreement requires
the Company to comply with various covenants, including the following financial covenants: (a) a maximum Total Net Leverage Ratio (as
defined within the Credit Agreement) of 5.00:1.00, which maximum Total Net Leverage Ratio shall decrease during certain subsequent test
periods as set forth in the Credit Agreement (provided that, no more than once during the term of the Facilities, such maximum ratio applicable
at such time may be increased by the Company by 0.50:1.00 for a period of twelve (12) months after the consummation of a material acquisition);
and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of March 29, 2025 the Company was in compliance with all debt covenants.

The 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 Credit Agreement.

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

As of March 29, 2025, $413.0 was outstanding
under the Term Loan, $5.0 was outstanding under the Revolving Credit Facility and $3.7 of the Revolving Credit Facility was being utilized
to provide letters of credit to secure the Company’s obligations relating to certain insurance programs. The Company had the ability
to borrow up to an additional $491.3 under the Revolving Credit Facility as of March 29, 2025.

Senior Notes

In fiscal 2022, RBCA issued
$500.0 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, after deducting initial purchasers’ discounts and commissions and offering expenses,
and were used to fund a portion of the 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 Credit Agreement.

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.
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.

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Foreign Borrowing Arrangements

One of our foreign subsidiaries,
Schaublin SA, has a CHF 5.0 (approximately $5.5 USD) credit line (the “Foreign Credit Line”) with Credit Suisse (Switzerland)
Ltd. to provide future working capital, if necessary. As of March 29, 2025, $0.1 was being utilized to provide a bank guarantee. Fees
associated with the Foreign Credit Line are nominal.

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

Interest Rate Swap

In fiscal 2023, the Company
entered into a three-year U.S. dollar-denominated interest rate swap (“the Interest Rate Swap”) from a third-party financial
counterparty under the Credit Agreement. The Interest Rate Swap was executed to protect the Company from interest rate volatility on our
variable-rate Term Loan. The Interest Rate Swap became effective December 30, 2022 and is comprised of a $600.0 notional with a maturity
of three years. We receive a variable rate based on one-month Term SOFR and pay a fixed rate of 4.455%. The notional on the Interest Rate
Swap will amortize as follows:

Year 1: $600.0

Year 2: $400.0

Year 3: $100.0

The Interest Rate Swap has
been designated as a cash flow hedge of the variability of the first unhedged interest payments (the hedged transactions) paid over the
hedging relationship’s specified time period of three years attributable to the borrowing’s contractually specified interest
index on the hedged principal of its general borrowing program or replacement or refinancing thereof.

Cross Currency Swap

The Company is exposed to foreign
exchange rate fluctuations as some of our subsidiaries operate in various countries.

On August 12, 2024, the Company
entered into the Cross Currency Swap with a third-party financial counterparty. The objective of the Cross Currency Swap is to economically
hedge the Company’s net investment in its lower-tier European subsidiary, Schaublin, against adverse changes in the Swiss franc/U.S.
dollar exchange rate. The Cross Currency Swap is based upon a net investment of CHF 69.4 ($80.0 USD) notional amount with a three-year
maturity date. RBC receives a fixed U.S. dollar amount on a month-to-month basis based upon a fixed annual rate of 2.77% of the notional
amount. At maturity, RBC will net-settle the principal of the Cross Currency Swap in cash with the counterparty. The Cross Currency Swap
has been designated as a net investment hedge on an after-tax basis.

Preferred Stock

Prior to October 15, 2024,
the Company had outstanding 4,600,000 shares of 5.00% Series A Mandatory Convertible Preferred Stock (“MCPS”) to which we
paid a quarterly dividend aggregating $5.75, but on that date each then-outstanding share of the MCPS converted into 0.4413 shares of
common stock, resulting in the retirement of the MCPS and the issuance of 2,029,955 shares of common stock. Because the MCPS is no longer
outstanding, the Company will not pay MCPS dividends in the future, resulting in a cash savings of $23.0 per year.

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Cash Flows

Fiscal 2025 Compared to Fiscal 2024

The following table summarizes our cash
flow activities:

During fiscal 2025, we generated
cash of $293.6 from operating activities compared to $274.7 for fiscal 2024. The increase of $18.9 was mainly the result of a $36.3 increase
in net income partially offset by a $6.2 unfavorable change in non-cash activity and net unfavorable change in operating assets and liabilities
of $11.2. The unfavorable change in operating assets and liabilities is detailed in the table below. The change in non-cash activity was
primarily driven by $0.7 more depreciation and amortization and $11.0 more stock-based compensation partially offset by $0.6 less amortization
of deferred financing costs, a $14.5 unfavorable change in deferred taxes, $0.5 less non-cash operating lease expense, $0.2 less losses
on the disposition of assets, and $2.1 less in restructuring and other non-cash charges.

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

During fiscal 2025, we used
$49.8 for investing activities as compared to $52.2 for fiscal 2024. This decrease in cash used was primarily attributable to $19.3 less
cash used for acquisitions in fiscal 2025. This was partially offset by $16.6 more capital expenditures and $0.3 less proceeds from the
sale of assets in fiscal 2025 compared to fiscal 2024.

During fiscal 2025, we
used cash of $270.4 for financing activities compared to $223.5 in fiscal 2024. This change was primarily due to $82.4 more
repayments on our revolving credit facilities and $37.0 more repayments on the Term Loan partially offset by $46.7 more proceeds
from our revolving credit facilities, $14.5 more proceeds from the exercise of employee stock options, $4.5 proceeds from a mortgage,
and $5.8 less preferred stock dividends paid.

Capital Expenditures

Our capital expenditures in
fiscal 2025 were $49.8 compared to $33.2 in fiscal 2024. We expect to make capital expenditures of approximately 3.0% to 3.5% of net sales
during fiscal 2026 in connection with our existing business. We funded our fiscal 2025 capital expenditures, and expect to fund fiscal
2026 capital expenditures, principally through existing cash and internally generated funds. We may also make substantial additional capital
expenditures in connection with acquisitions.

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Critical Accounting Policies and Estimates

Our discussion and analysis
of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets
and liabilities. We evaluate our estimates on an on-going basis. Estimates are used for, but not limited to, the accounting for the allowance
for credit losses, valuation of inventories, goodwill and intangible assets, depreciation and amortization, income taxes and tax reserves,
the valuation of options and the valuation of business combinations. We base our estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from other sources. We believe our judgments related to these
accounting estimates are appropriate. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition.
The performance obligations for the majority of RBC’s product sales are satisfied at the point in time in which the products are
shipped. The Company has determined that the customer obtains control upon shipment of the product based on the shipping terms (i.e. when
it ships from RBC’s dock or when the product arrives at the customer’s dock) and recognizes revenue when control has transferred
to the customer. Once a customer has obtained control, the customer is able to direct the use of, and obtain substantially all of the
remaining benefits from, the asset. Approximately 98% of the Company’s revenue was recognized in this manner based on sales for
the fiscal years ended March 29, 2025 and March 30, 2024.

Inventory. Inventory
is stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. We account for inventory
under a full absorption method. We record adjustments to the value of inventory based upon past sales history and forecasted plans to
sell our inventories. The physical condition, including age and quality, of the inventories is also considered in establishing its valuation.
These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements if future economic
conditions, customer inventory levels or competitive conditions differ from our expectations.

Goodwill and Indefinite-Lived
Intangible Assets. Goodwill (representing the excess of the amount paid to acquire a company over the estimated fair value of the
net assets acquired) and indefinite-lived intangible assets are not amortized but instead are tested for impairment annually, or when
events or circumstances indicate that the carrying value of such asset may not be recoverable. Separate tests are performed for goodwill
and indefinite lived intangible assets. The Company performs the annual impairment testing during the fourth quarter of each fiscal year.
We completed a quantitative test of impairment on the indefinite lived intangible assets with no impairment noted in fiscal year 2025.
The determination of any goodwill impairment is made at the reporting unit level. The Company determines the fair value of a reporting
unit and compares it to its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is
recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company applies the income approach
(discounted cash flow method) in testing goodwill for impairment. The key assumption used in the discounted cash flow method used to estimate
fair value is gross margin, which is affected by expectations about future market or economic conditions. The fair value of the reporting
units exceeds the carrying value by a minimum of 13.8% at each of the two reporting units. Assuming no growth in gross margin within the
model would not result in impairment of goodwill for any of our reporting units. Although no changes are expected, if the actual results
of the Company are less favorable than the assumptions the Company makes regarding estimated cash flows, the Company may be required to
record an impairment charge in the future.

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 estimated 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 which
are prepared with the assistance of a specialist and consider our best estimates of inputs and assumptions that a market participant would
use. We utilize a specialist for these valuations due to the complexity and estimation uncertainty involved in determining the fair value
given the significant assumptions involved. Significant assumptions utilized in the valuation models include discount rates, revenue growth
rates and EBITDA margins. 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.

Income Taxes. As part of the process
of preparing the consolidated financial statements, we are required to estimate the income taxes in each jurisdiction in which we operate.
This process involves estimating the actual current tax liabilities together with assessing temporary differences resulting from the differing
treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are
included in the consolidated balance sheets. We must then assess the likelihood that the deferred tax assets will be recovered, and to
the extent that we believe that recovery is not more than likely, we are required to establish a valuation allowance. If a valuation allowance
is established or increased during any period, we are required to include this amount as an expense within the tax provision in the consolidated
statements of operations. Significant judgment is required in determining our provision for income taxes, deferred tax assets and liabilities,
accrual for uncertain tax positions and any valuation allowance recognized against net deferred tax assets.

28

Recent Accounting Pronouncements

For a discussion of recent
accounting pronouncements, refer to Note 2.

Off-Balance Sheet Arrangements

The Company has $3.7 of outstanding
standby letters of credit, all of which are under the Revolving Credit Facility. We had no significant off-balance sheet arrangements
as of March 29, 2025.

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
financial and business analysis below provides information that we believe is relevant to an assessment and understanding of our consolidated
financial position, results of operations and cash flows. This financial and business analysis should be read in conjunction with the
consolidated financial statements and related notes. All references to “Notes” in this Item 7 refer to the “Notes to
Consolidated Financial Statements” included in Item 8 of this Annual Report on Form 10-K.

The
following discussion contains statements reflecting our views about our future performance that constitute “forward-looking statements”
within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. See the information provided
in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K under the heading “Cautionary Statement as to
Forward-Looking Information.”

20

General

We
are a well-known international manufacturer of highly engineered precision bearings, components and essential systems for the industrial,
defense and aerospace industries. Our precision solutions are integral to the manufacture and operation of most machines and mechanical
systems, reduce wear to moving parts, facilitate proper power transmission, and reduce damage and energy loss caused by friction. While
we manufacture products in all major bearing categories, we focus primarily on the higher end of the bearing market where we believe
our value-added manufacturing and engineering capabilities enable us to differentiate ourselves from our competitors and enhance profitability.
We believe our unique expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete.
With 54 facilities in 11 countries, of which 38 are manufacturing facilities, we have been able to significantly broaden our end markets,
products, customer base and geographic reach. We have a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31.
Based on this policy, fiscal 2024 had 52 weeks and fiscal 2023 had 52 weeks. We currently operate under two reportable business segments
– Aerospace/Defense and Industrial:

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/Defense and 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 highly engineered bearings and precision components through
the following efforts:

We
have demonstrated expertise in acquiring and integrating bearing and precision engineered component manufacturers that have complementary
products or distribution channels and have provided significant margin enhancement. We have consistently increased the profitability
of acquired businesses through a process of methods and systems improvement coupled with the introduction of complementary and proprietary
new products. Since 1992 we have completed 29 acquisitions, which have broadened our end markets, products, customer base and geographic
reach.

Outlook

Our
net sales increased 6.2% year over year due to an increase of 20.7% in Aerospace and Defense segment sales and a 0.2% increase in Industrial
segment sales.

Aerospace
and Defense segment sales increased 20.7% year over year. Commercial aerospace increased 20.3%, demonstrating the continued recovery
and early stages of a growth cycle. Defense sales, which represent approximately 31.9% of segment sales during the year, were up more
than 21.6% for the year. Our backlog in this end market is significant and deliveries are expected to continue to accelerate in the coming
years.

21

For
the fiscal year ended March 30, 2024, approximately 66.7% of our net sales were attributable to the Industrial segment while the
Aerospace/Defense segment contributed approximately 33.3% of our net sales. For the fourth quarter of fiscal 2024, approximately
65.6% of our net sales were attributable to the Industrial segment compared to approximately 34.4% for the Aerospace/Defense
segment. Approximately $186.8 of Industrial segment sales in the fourth quarter of fiscal 2024 were to distribution and aftermarket
compared to $185.7 in the prior year while approximately $84.5 were made directly to OEMs in the fourth quarter of fiscal 2024
compared to $86.9 in the prior year. Net sales in the Aerospace/Defense segment increased $20.6, or 16.8%, for the fourth quarter of
fiscal 2024 compared to the same period last fiscal year. Commercial aerospace, which consisted of $78.2 of OEM and $19.7 of
distribution and aftermarket, increased by 12.0% compared to the fourth quarter of fiscal 2023 when OEM net sales were $68.8 and
distribution and aftermarket net sales were $18.5. This was driven by a continuing recovery as build rates and orders escalate in
the OEM markets and the aftermarket begins to pick up. Our defense markets, which consisted of $34.2 of OEM and $10.3 of
distribution and aftermarket, increased by 29.0% compared to the fourth quarter of fiscal 2023 when OEM net sales were $28.2 and
distribution and aftermarket net sales were $6.3.

The
Company forecasts net sales to be approximately $415.0 to $420.0 in the first quarter of fiscal 2025, compared to $387.1 in the first
quarter of fiscal 2024, which represents a growth rate of 7.2% to 8.5%.

Our
order backlog, as of March 30, 2024, was $726.1 compared to $663.8 as of April 1, 2023. These figures exclude orders from our Sargent
marine and Sargent aerospace businesses that are expected to be fulfilled more than 12 months after the balance sheet dates. Including
all orders from our Sargent marine and Sargent aerospace businesses, our backlog as of March 30, 2024 was $821.5 compared to $759.4 as
of April 1, 2023. This increase reflects continued growth, most notably in our commercial aerospace and marine defense end markets. Beginning
in fiscal year 2025, we will disclose our full backlog for periods presented.

We
experienced solid operating cash flow generation during fiscal 2024 (as discussed in the “Liquidity and Capital Resources”
section below). We believe that operating cash flows and available credit under our revolving bank credit facilities will provide adequate
resources to fund internal growth initiatives for the foreseeable future, including at least the next 12 months. As of March 30, 2024,
we had cash and cash equivalents of $63.5, of which, $25.9 was cash held by our foreign operations.

Sources
of Revenue

A
contract with a customer exists when there is commitment and approval from both parties involved, the rights of the parties are identified,
payment terms are defined, the contract has commercial substance and collectability of consideration is probable. The Company has determined
that the contract with the customer is established when the customer purchase order is accepted or acknowledged. Long-term agreements
(“LTAs”) are used by the Company and certain of its customers to reduce their supply uncertainty for a period of time, typically multiple
years. While these LTAs define commercial terms including pricing, termination rights and other contractual requirements, they do not
represent the contract with the customer for revenue recognition purposes.

Approximately
98% of the Company’s revenue was generated from the sale of products to customers in the Industrial and Aerospace/Defense markets
for each of the years ended March 30, 2024 and April 1, 2023. The remaining 2% of the Company’s revenue for each of the last two
fiscal years was derived from services performed for customers, which included repair and refurbishment work performed on customer-controlled
assets as well as design and test work.

Refer
to Note 2 for further discussion regarding the Company’s revenue policy.

Cost
of Sales

Cost
of sales includes employee compensation and benefits, raw materials, outside processing, depreciation of manufacturing machinery and
equipment, supplies and manufacturing overhead.

Less
than half of our factory costs, depending on product mix, are attributable to raw materials, purchased components and outside processing.
When we experience raw material inflation, we attempt to offset these cost increases by changing our buying patterns, expanding our vendor
network and passing through price increases when possible. Although we experienced cost inflation on raw material, labor and overhead
for this fiscal year, we were able to mitigate it through pricing and strategic sourcing efforts.

We
monitor gross margin performance through a process of monthly operation reviews with all our divisions. We develop new products to target
certain markets allied to our strategies by first understanding volume levels and product pricing and then constructing manufacturing
strategies to achieve defined margin objectives. We only pursue product lines where we believe that the developed manufacturing process
will yield the targeted margins. Management monitors gross margins of all product lines on a monthly basis to determine which manufacturing
processes or prices should be adjusted.

22

Fiscal
2024 Compared to Fiscal 2023

Results
of Operations

(amounts
in millions, except share and per share data)

Net
sales for the fiscal year ended March 30, 2024 increased $91.0, or 6.2%, for fiscal 2024 compared to fiscal 2023. This increase in net
sales was the result of an 0.2% increase in our Industrial segment, while sales in our Aerospace/Defense segment increased 20.7% year
over year. Industrial segment sales remain very strong, most notably, in the mining, energy, and general industrial markets. Within Aerospace/Defense,
total commercial aerospace increased 20.3% and defense increased 21.6% year over year. The commercial aerospace increase reflects the
continued recovery in the market over the last year, and what we believe is the start of a growth cycle as aircraft build rates at large
OEMs are expected to escalate in coming years.

Net
income attributable to common stockholders increased by $43.1 to $186.9 for fiscal 2024 compared to fiscal 2023. The net income attributable
to common stockholders of $186.9 in fiscal 2024 was impacted by $3.0 of restructuring and consolidation charges incurred, $78.7 of interest
expense, $23.0 of preferred stock dividends and $51.9 of income tax expense. The net income attributable to common stockholders of $143.8
in fiscal 2023 was impacted by $8.8 of transition service agreement (TSA) costs associated with the Dodge acquisition, $2.7 of restructuring
and consolidation charges incurred at some of our plants located in South Carolina, $76.7 of interest expense, $22.9 of preferred stock
dividends and $43.0 of income tax expense.

Gross
Margin

Gross
margin was 43.0% of sales for fiscal 2024 compared to 41.2% for the same period last year. Gross margin during fiscal 2024 included $0.3
of inventory rationalization costs associated with consolidation efforts at one of our facilities located in California. Gross margin
in fiscal 2023 included $0.2 of inventory rationalization costs associated with consolidation efforts at one of our facilities located
in South Carolina. The expansion in margin during fiscal 2024 reflects the combination of continued cost efficiencies achieved through
integration, product mix, pricing and the ability to maintain appropriate pricing levels while facing an inflationary environment both
as it relates to manufacturing costs and human capital.

Selling,
General and Administrative

SG&A
expenses increased by $23.8 to $253.5 for fiscal 2024 compared to fiscal 2023. The increase in SG&A was primarily driven by personnel
costs, IT costs and other professional fees.

Other,
Net

23

Other
operating expenses for fiscal 2024 totaled $74.8 compared to $82.1 for fiscal 2023. For fiscal 2024, other operating costs consisted
primarily of $70.4 of amortization expense, $2.7 of plant consolidation and restructuring costs, $0.2 of bad debt expense, $0.3 of acquisition
costs, $0.6 of losses on disposal of assets, and $0.6 of other items. For fiscal 2023, other operating expenses were comprised of $8.9
of TSA costs and other costs associated with the Dodge acquisition, $69.1 of amortization expense, $2.5 of plant consolidation and restructuring
costs, $0.8 of bad debt expense, $0.3 of asset impairments, $0.3 of losses on disposal of assets, and $0.2 of other items.

Interest
Expense, Net

Interest expense, net, consists
of interest charged on the Company’s debt agreements and amortization of deferred financing fees, offset by interest income. Interest
expense, net was $78.7 for fiscal 2024 compared to $76.7 for fiscal 2023 as a result of additional interest on our variable rate debt.
Though interest rates have steadily increased since the beginning of fiscal 2023, the interest rate swap that we entered into that year
(see “Liquidity and Capital Resources” below) has enabled us to manage interest costs as approximately 75% of our debt bears
interest at a fixed rate, after giving effect to the interest rate swap agreement in place.

Other
Non-Operating Expense

Other
non-operating expense for fiscal 2024 totaled $1.7, consisting primarily of post-retirement benefit costs. Non-operating costs incurred
during fiscal 2023 were $6.6, consisting primarily of costs associated with post-retirement benefit plans led by a $4.3 settlement loss
related to the derecognition of $15.6 of pension liabilities and $15.6 of pension assets resulting from an annuity contract executed
in March 2023.

Income
Taxes

Income
tax expense for fiscal 2024 was $51.9 compared to $43.0 for fiscal 2023. Our effective income tax rate for fiscal 2024 was 19.8% compared
to 20.5% for fiscal 2023. The effective income tax rates are different from the U.S. statutory rate due to the U.S. credits for increasing
research activities and foreign-derived intangible income provision which decrease the rate and differences in foreign and state income
taxes which increase the rate. The effective income tax rate for fiscal 2024 of 19.8% included discrete items totaling a benefit of $8.2
which is substantially related to a benefit associated with stock-based compensation, a reduction in unrecognized tax benefits due to
the expiration of the statute of limitations, and the accrual of deferred tax assets related to state tax modifications. The effective
income tax rate for fiscal 2024 without these discrete items would have been 22.9%. The effective income tax rate for fiscal 2023 of
20.5% included discrete items of $5.1 of benefit comprised substantially of a benefit associated with stock-based compensation and a
reduction in unrecognized tax benefits partially due to the expiration of the statute of limitations. The effective income tax rate for
fiscal 2023 without these discrete items would have been 22.9%.

Global
Minimum Tax

In
October 2021, the Organisation for Economic Co-operation and Development (“OECD”) announced an Inclusive Framework on Base
Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational
corporations at a minimum rate of 15%. Subsequently multiple sets of administrative guidance have been issued. Many non-US tax jurisdictions
have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 with the adoption
of additional components in later years or announced their plans to enact legislation in future years. We are continuing to evaluate
the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions in which we
operate.

24

Segment
Information

We
report our financial results under two operating segments: Aerospace/Defense and Industrial. We use gross margin as the primary measurement
to assess the financial performance of each reportable segment.

Aerospace/Defense
Segment:

Net sales increased $89.1,
or 20.7%, for fiscal 2024 compared to fiscal 2023. Commercial aerospace, which consisted of $278.5 of OEM and $75.3 of distribution and
aftermarket, increased by 20.3% compared to fiscal 2023 when OEM net sales were $234.4 and distribution and aftermarket net sales were
$59.7. This was driven by a continuing recovery as build rates and orders escalated in the OEM markets and the aftermarket began to pick
up. Our defense markets, which consisted of $135.3 of OEM and $30.3 of distribution and aftermarket, increased by 21.6% compared to fiscal
2023 when OEM net sales were $110.3 and distribution and aftermarket net sales were $25.9.

During the year, we saw
improvement in the sales and order volume to our commercial aerospace customers as aircraft build rates continued to grow. Our
backlog and recent results reflect the early stages of this process which we expect to continue to see in upcoming quarters. Our
defense markets, which represented about 31.9% of sales, increased by approximately 21.6% during the period, driven by increased
sales and order volume in the marine and helicopter end markets. Overall distribution and aftermarket sales, which represent 20.3%
of segment sales, were up 23.4% year over year.

Gross
margin was $208.8, or 40.2% of net sales, in fiscal 2024 compared to $171.0, or 39.7% of sales, for the same period in fiscal 2023. We
anticipate margin expansion in the next year as the increasing orders on commercial products add volume through our plants driving cost
efficiencies.

Industrial
Segment:

Net sales increased $1.9,
or 0.2%, during fiscal 2024 compared to the same period last year. The continued strong performance was driven by the energy, mining,
and general industrial markets. Sales to distribution and the aftermarket were $707.6 in fiscal 2024 compared to $691.7 in the prior year,
a 2.3% year over year increase. OEM sales were $333.3 for fiscal 2024 compared to $347.3 in the prior year. The 4.0% decrease in OEM sales
compared to the prior year was primarily due to some softness in the semicon end market.

Gross
margin was $461.7, or 44.4% of net sales, in fiscal 2024 compared to $433.8, or 41.8% of sales, for the same period in fiscal 2023. The
gross margin for the fiscal 2023 included the unfavorable impact of $0.2 associated with inventory rationalization costs at one of our
plants in South Carolina. The expansion in margin year over year was led by cost efficiencies achieved through synergy, product mix,
and maintenance of appropriate pricing levels to offset the inflationary environment primarily driven by the cost of materials, energy
and human capital.

25

Corporate:

Corporate
SG&A increased $6.8 or 9.0% for fiscal 2024 compared to fiscal 2023 due to increased spend in IT and personnel-related costs. As
a percentage of net sales, Corporate SG&A was relatively flat year over year.

Liquidity
and Capital Resources

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. 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 our revolving bank credit facilities will provide adequate resources
to fund internal growth initiatives for the foreseeable future.

Our
ability to meet future working capital, capital expenditures 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, relocate, 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 March 30, 2024, we had cash and cash equivalents of $63.5, of which, approximately $25.9 was cash held by our foreign operations.
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. As discussed in further detail below, we also have the ability to borrow money from our existing
credit facilities.

Domestic
Credit Facility

In
fiscal 2022, RBC Bearings Incorporated, our top holding company, and our Roller Bearing Company of America, Inc. subsidiary (“RBCA”)
entered into a Credit Agreement (the “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. The Credit
Agreement provides the Company with (a) a $1,300.0 term loan (the “Term Loan”), which was used to fund a portion of the cash
purchase price for the acquisition of Dodge Industrial, Inc. (“Dodge”) and to pay related fees and expenses, and (b) a $500.0
revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan, the “Facilities”).
Debt issuance costs associated with the Credit Agreement totaled $14.9 and are being amortized over the life of the Credit Agreement.

Initially,
amounts outstanding under the Facilities generally bore interest at either, at the Company’s option, (a) a base rate determined
by reference to the higher of (i) Wells Fargo’s prime lending rate, (ii) the federal funds effective rate plus 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 was based on the Company’s consolidated ratio of total net debt to consolidated EBITDA (as defined within
the Credit Agreement) from time to time. In December 2022, the Credit Agreement was amended to replace LIBOR with the secured overnight
financing rate administered by the Federal Reserve Bank of New York (“SOFR”) so that borrowings under the Facilities denominated
in U.S. dollars bear interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement) plus a credit spread adjustment
of 0.10% plus a margin ranging from 0.75% to 2.00% depending on the Company’s consolidated ratio of total net debt to consolidated
EBITDA. The Facilities are subject to a SOFR floor of 0.00%. As of March 30, 2024, the Company’s margin was 1.25% for SOFR loans,
the commitment fee rate was 0.20%, and the letter of credit fee rate was 1.25%. A portion of the Term Loan is subject to a fixed-rate
interest swap as discussed in Note 13.

The
Term Loan matures in November 2026 and amortizes in quarterly installments with the balance payable on the maturity date. The Company
can elect to prepay some or all of the outstanding balance from time to time without penalty, which will offset future quarterly amortization
installments. Due to prepayments previously made, the required future principal payments on the Term Loan are $0 for fiscal 2025, $0
for fiscal 2026, and $675.0 for fiscal 2027. The Revolving Credit Facility expires in November 2026, at which time all amounts outstanding
under the Revolving Credit Facility will be payable.

The
Credit Agreement requires the Company to comply with various covenants, including the following financial covenants: (a) a maximum Total
Net Leverage Ratio (as defined within the Credit Agreement) of 5.00:1.00, which maximum Total Net Leverage Ratio shall decrease during
certain subsequent test periods as set forth in the Credit Agreement (provided that, no more than once during the term of the Facilities,
such maximum ratio applicable at such time may be increased by the Company by 0.50:1.00 for a period of twelve (12) months after the
consummation of a material acquisition); and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of March 30, 2024 the Company was
in compliance with all debt covenants.

The
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 Credit
Agreement.

26

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

As
of March 30, 2024, $675.0 was outstanding under the Term Loan, $3.7 of the Revolving Credit Facility was being utilized to provide letters
of credit to secure the Company’s obligations relating to certain insurance programs, and $18.0 of the Revolving Credit Facility
had been used to fund the purchase of the business assets of Specline, Inc. which is discussed in Note 9. The Company had the ability
to borrow up to an additional $478.3 under the Revolving Credit Facility as of March 30, 2024.

Senior
Notes

In
fiscal 2022, RBCA issued $500.0 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, after deducting initial purchasers’ discounts and commissions
and offering expenses, and were used to fund a portion of the 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 Credit Agreement.

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.

27

Foreign
Borrowing Arrangements

One
of our foreign subsidiaries, Schaublin SA, has a CHF 5.0 (approximately $5.8 USD) credit line (the “Foreign Credit Line”)
with Credit Suisse (Switzerland) Ltd. to provide future working capital, if necessary. As of March 30, 2024, $2.2 had been borrowed from
the Foreign Credit Line and $0.1 was being utilized to provide a bank guarantee. Fees associated with the Foreign Credit Line are nominal.

Interest
Rate Swap

In
fiscal 2023, the Company entered into a three-year USD-denominated interest rate swap (“the Swap”) from a third-party financial
counterparty under the Credit Agreement. The Swap was executed to protect the Company from interest rate volatility on our variable-rate
Term Loan Facility. The Swap became effective December 30, 2022 and is comprised of a $600.0 notional with a maturity of three years.
We receive a variable rate based on one-month Term SOFR and pay a fixed rate of 4.455%. As of March 30, 2024, approximately 75% of our
debt bore interest at a fixed rate after giving effect to the Swap in place. The notional on the Swap will amortize as follows:

Year
1: $600.0

Year
2: $400.0

Year
3: $100.0

The
Swap has been designated as a cash flow hedge of the variability of the first unhedged interest payments (the hedged transactions) paid
over the hedging relationship’s specified time period of three years attributable to the borrowing’s contractually specified
interest index on the hedged principal of its general borrowing program or replacement or refinancing thereof.

Cash
Flows

Fiscal
2024 Compared to Fiscal 2023

The
following table summarizes our cash flow activities:

During
fiscal 2024, we generated cash of $274.7 from operating activities compared to $220.6 for fiscal 2023. The increase of $54.1 was mainly
the result of a $43.2 increase in net income and a $12.4 favorable change in non-cash activity partially offset by a net unfavorable
change in operating assets and liabilities of $1.5. The unfavorable change in operating assets and liabilities is detailed in the table
below. The change in non-cash activity was primarily driven by $3.9 more depreciation and amortization, $3.4 more stock-based compensation
and a favorable change in deferred taxes of $9.1, partially offset by $4.2 less amortization of deferred financing costs.

28

The
following chart summarizes the impact on cash flow from operating assets and liabilities for fiscal 2024 versus fiscal 2023.

During
fiscal 2024, we used $52.2 for investing activities as compared to $14.0 for fiscal 2023. This increase in cash used was primarily attributable
to $19.3 of cash used for acquisitions in fiscal 2024 compared to a favorable purchase price adjustment of $27.5 in fiscal 2023. This
was partially offset by $8.8 fewer capital expenditures in fiscal 2024 compared to fiscal 2023.

During
fiscal 2024, we used cash of $223.5 for financing activities compared to $322.8 in fiscal 2023. This favorable change was primarily due
to $8.8 more proceeds from exercises of employee stock options, $20.3 of proceeds received from our revolving credit facilities and $75.0
less repayment of debt compared to the prior year.

Capital
Expenditures

Our
capital expenditures in fiscal 2024 were $33.2 compared to $42.0 in fiscal 2023. We expect to make capital expenditures of approximately
3.0% to 3.5% of net sales during fiscal 2025 in connection with our existing business. We funded our fiscal 2024 capital expenditures,
and expect to fund fiscal 2025 capital expenditures, principally through existing cash and internally generated funds. We may also make
substantial additional capital expenditures in connection with acquisitions.

Critical
Accounting Policies and Estimates

Our
discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which
have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure
of contingent assets and liabilities. We evaluate our estimates on an on-going basis. Estimates are used for, but not limited to, the
accounting for the allowance for doubtful accounts, valuation of inventories, goodwill and intangible assets, depreciation and amortization,
income taxes and tax reserves, the valuation of options and the valuation of business combinations. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We believe
our judgments related to these accounting estimates are appropriate. Actual results may differ from these estimates under different assumptions
or conditions.

Revenue
Recognition. The performance obligations for the majority of RBC’s product sales are satisfied at the point in time in which
the products are shipped. The Company has determined that the customer obtains control upon shipment of the product based on the shipping
terms (i.e. when it ships from RBC’s dock or when the product arrives at the customer’s dock) and recognizes revenue when
control has transferred to the customer. Once a customer has obtained control, the customer is able to direct the use of, and obtain
substantially all of the remaining benefits from, the asset. Approximately 98% of the Company’s revenue was recognized in this
manner based on sales for the fiscal years ended March 30, 2024 and April 1, 2023.

The
Company has determined performance obligations are satisfied over time for customer contracts where RBC provides services to customers
and also for a limited number of product sales. RBC has determined revenue recognition over time is appropriate for our service revenue
contracts as they create or enhance an asset that the customer controls throughout the duration of the contract. Approximately 2% of
the Company’s revenue was recognized in this manner based on sales for the fiscal years ended March 30, 2024 and April 1, 2023.
Revenue recognition over time is appropriate for customer contracts with product sales in which the product sold has no alternative use
to RBC without significant economic loss and an enforceable right to payment exists, including a normal profit margin from the customer,
in the event of contract termination. These types of contracts comprised less than 1% of total sales for the fiscal years ended March
30, 2024 and April 1, 2023. For both of these types of contracts, revenue is recognized over time based on the extent of progress towards
completion of the performance obligation. The Company utilizes the cost-to-cost measure of progress for over-time revenue recognition
contracts as we believe this measure best depicts the transfer of control to the customer, which occurs as we incur costs on contracts.
Revenues, including profits, are recorded proportionally as costs are incurred. Costs to fulfill include labor, materials, subcontractors’
costs, and other direct and indirect costs.

29

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. Contract assets are included within prepaid expenses and other current assets or other noncurrent assets on the consolidated
balance sheets.

Inventory.
Inventory is stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. We account
for inventory under a full absorption method. We record adjustments to the value of inventory based upon past sales history and forecasted
plans to sell our inventories. The physical condition, including age and quality, of the inventories is also considered in establishing
its valuation. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements
if future economic conditions, customer inventory levels or competitive conditions differ from our expectations.

Goodwill and Indefinite-Lived
Intangible Assets. Goodwill (representing the excess of the amount paid to acquire a company over the estimated fair value of the
net assets acquired) and indefinite-lived intangible assets are not amortized but instead are tested for impairment annually, or when
events or circumstances indicate that the carrying value of such asset may not be recoverable. Separate tests are performed for goodwill
and indefinite lived intangible assets. We completed a quantitative test of impairment on the indefinite lived intangible assets with
no impairment noted in fiscal year 2024. The determination of any goodwill impairment is made at the reporting unit level. The Company
determines the fair value of a reporting unit and compares it to its carrying amount. If the carrying amount of the reporting unit exceeds
its fair value, an impairment loss is recognized for any amount by which the carrying amount exceeds the reporting unit’s fair value.
The Company applies the income approach (discounted cash flow method) in testing goodwill for impairment. The key assumptions used in
the discounted cash flow method used to estimate fair value include the discount rates, revenue growth rates and EBITDA margin which
are affected by expectations about future market or economic conditions. Discount rates, revenue growth rates and EBITDA margin are the
most sensitive and susceptible to change as they require significant management judgment. Discount rates are determined by using a weighted
average cost of capital (“WACC”). The WACC considers market and industry data as well as Company-specific risk factors for
each reporting unit in determining the appropriate discount rate to be used. The discount rate utilized for each reporting unit for our
fiscal 2024 test was 10.0% and is indicative of the return an investor would expect to receive for investing in such a business. Terminal
growth rate determination follows common methodology of capturing the present value of perpetual cash flow estimates beyond the last
projected period assuming a constant WACC and long-term growth rates. The terminal growth rate used for our fiscal 2024 test was 2.5%.
The Company has determined that, to date, no impairment of goodwill exists and fair value of the reporting units exceeded the carrying
value in total by approximately 53.5%. The fair value of the reporting units exceeds the carrying value by a minimum of 18.8% at each
of the two reporting units. A decrease of 1.0% in our terminal growth rate would not result in impairment of goodwill for any of our
reporting units. An increase of 1.0% in our discount rate would not result in impairment of goodwill for any of our reporting units.
Assuming no growth in EBITDA margin within the model would not result in impairment of goodwill for any of our reporting units. The Company
performs the annual impairment testing during the fourth quarter of each fiscal year. Although no changes are expected, if the actual
results of the Company are less favorable than the assumptions the Company makes regarding estimated cash flows, the Company may be required
to record an impairment charge in the future.

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
estimated 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 which are prepared with the assistance of a specialist and consider our best estimates of inputs and assumptions
that a market participant would use. We utilize a specialist for these valuations due to the complexity and estimation uncertainty involved
in determining the fair value given the significant assumptions involved. Significant assumptions utilized in the valuation models include
discount rates, revenue growth rates and EBITDA margins. 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.

Income
Taxes. As part of the process of preparing the consolidated financial statements, we are required to estimate the income taxes in
each jurisdiction in which we operate. This process involves estimating the actual current tax liabilities together with assessing temporary
differences resulting from the differing treatment of items for tax and financial reporting purposes. These differences result in deferred
tax assets and liabilities, which are included in the consolidated balance sheets. We must then assess the likelihood that the deferred
tax assets will be recovered, and to the extent that we believe that recovery is not more than likely, we are required to establish a
valuation allowance. If a valuation allowance is established or increased during any period, we are required to include this amount as
an expense within the tax provision in the consolidated statements of operations. Significant judgment is required in determining our
provision for income taxes, deferred tax assets and liabilities, accrual for uncertain tax positions and any valuation allowance recognized
against net deferred tax assets.

30

Recent
Accounting Pronouncements

For a discussion of recent
accounting pronouncements, refer to Note 2.

Impact
of Inflation and Changes in Prices of Raw Materials

In fiscal 2024, the economy
experienced inflation. We purchase steel at market prices, which fluctuate as a result of supply and demand in the marketplace. To date,
we have managed price increases by changing our buying patterns, expanding our vendor network, and passing increases on to our customers
through price increases on our products, the assessment of steel surcharges on our customers, or entry into LTAs with our customers containing
escalator provisions tied to our invoiced price of steel. However, even if we are able to pass these cost increases to our customers,
there may be a time lag of several months between the time we experience a cost increase and when we implement surcharges or price
increases, particularly for orders already in our backlog. As a result, our gross margin percentage may decline.

Competitive
pressures and the terms of certain of our long-term contracts may require us to absorb at least part of these cost increases, particularly
during periods of high inflation. Our principal raw materials are stainless and 52100 wire and rod steel (types of high alloy steel),
which have historically been readily available. We have never experienced a work stoppage due to a supply shortage. We maintain multiple
sources for raw materials including steel and have various supplier agreements. Through sole-source arrangements, supplier agreements
and pricing, we have been able to minimize our exposure to fluctuations in raw material prices.

Our suppliers and sources
of raw materials are based in the U.S., Europe and Asia. We believe that our sources are adequate for our needs in the foreseeable
future, that there exist alternative suppliers for our raw materials, and that in most cases readily available alternative materials
can be used for most of our raw materials.

Off-Balance
Sheet Arrangements

The Company has $3.7 of outstanding
standby letters of credit, all of which are under the Revolving Credit Facility. We also have a contractual obligation for licenses related
to the implementation and upgrade of an enterprise resource planning (“ERP”) system. The remaining contractual obligation
related to these ERP license costs of $7.6 will end in June of 2026.

Other
than the items noted above, we had no significant off-balance sheet arrangements as of March 30, 2024.

31

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The financial and business
analysis below provides information which we believe is relevant to an assessment and understanding of our consolidated financial position,
results of operations and cash flows. This financial and business analysis should be read in conjunction with the consolidated financial
statements and related notes. All references to “Notes” in this Item 7 refer to the “Notes to Consolidated Financial
Statements” included in Item 8 of this Annual Report on Form 10-K.

The following discussion
contains statements reflecting our views about our future performance that constitute “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. See the information provided
in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K under the heading “Cautionary Statement as to
Forward-Looking Information.”

20

General

We are a well-known international
manufacturer of highly engineered precision bearings, components and essential systems for the industrial, defense and aerospace industries.
Our precision solutions are integral to the manufacture and operation of most machines and mechanical systems, reduce wear to moving
parts, facilitate proper power transmission, and reduce damage and energy loss caused by friction. While we manufacture products in all
major bearing categories, we focus primarily on the higher end of the bearing market where we believe our value-added manufacturing and
engineering capabilities enable us to differentiate ourselves from our competitors and enhance profitability. We believe our unique expertise
has enabled us to garner leading positions in many of the product markets in which we primarily compete. With 52 facilities in 10 countries,
of which 37 are manufacturing facilities, we have been able to significantly broaden our end markets, products, customer base and geographic
reach. We have a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy, fiscal
year 2023 had 52 weeks and fiscal year 2022 had 52 weeks. We currently operate under two reportable business segments – Aerospace/Defense
and Industrial:

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/Defense and 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 highly engineered bearings and precision components through
the following efforts:

We have demonstrated expertise
in acquiring and integrating bearing and precision engineered component manufacturers that have complementary products or distribution
channels and have provided significant margin enhancement. We have consistently increased the profitability of acquired businesses through
a process of methods and systems improvement coupled with the introduction of complementary and proprietary new products. Since 1992
we have completed 27 acquisitions, which have broadened our end markets, products, customer base and geographic reach.

21

Outlook

Our net sales increased
55.8% year over year due to an increase of 85.0% in Industrial segment sales and an increase of 12.8% in Aerospace and Defense
segment sales. Approximately $743.1 of the Industrial segment sales were from the Dodge business. Excluding those sales, Industrial
segment sales increased 9.8% year over year, reflecting sustained growth across many different areas, including in the
semiconductor, energy, mining, and the general industrial markets.

Aerospace and Defense segment
sales increased 12.8% year over year. Commercial aerospace increased 25.4%, reliably demonstrating the continued recovery and early stages
of a growth cycle that we anticipate to continue into the next fiscal year. Defense sales, which represent approximately 31.8% of segment
sales during the year, were down more than 7.0% for the year. Defense sales were negatively impacted by the timing of shipments associated
with our marine business. This is not expected to continue, as our backlog in this end market is significant and deliveries are expected
to accelerate in the coming years.

For the fiscal year
ended April 1, 2023, approximately 70.7% of our net sales were attributable to the Industrial segment while the Aerospace/Defense
segment contributed approximately 29.3% of our net sales. For the fourth quarter of fiscal 2023, approximately 69.1% of our net
sales were attributable to the Industrial segment compared to approximately 30.9% for the Aerospace/Defense segment. Approximately
68.1% of Industrial segment sales in the fourth quarter were to distribution and aftermarket while approximately 31.9% were made
directly to OEMs. Approximately 28.3% of our Aerospace/Defense segment sales were to the defense market in the fourth quarter of fiscal 2023. The Company expects net
sales to be approximately $380.0 to $390.0 in the first quarter of fiscal 2024, compared to $354.1 in the first quarter of fiscal
2023, which represents a growth rate of 7.3% to 10.1%.

We ended fiscal 2023 with
a backlog of $663.8 compared to $603.1 for the same period last year, representing a 10.1% increase year over year. This increase reflects
the continued growth in all of our end markets, especially in our commercial aerospace and marine defense end markets.

We experienced solid operating
cash flow generation during fiscal 2023 (as discussed in the section “Liquidity and Capital Resources” below). We believe
that operating cash flows and available credit under the Revolving Credit Facility and New 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 II, Item 8 – Notes 9, 12 and 17. As of April 1, 2023, we had cash and cash
equivalents of $65.4, of which, approximately $34.0 was cash held by our foreign operations.

Sources of Revenue

A contract with a customer
exists when there is commitment and approval from both parties involved, the rights of the parties are identified, payment terms are
defined, the contract has commercial substance and collectability of consideration is probable. The Company has determined that the contract
with the customer is established when the customer purchase order is accepted or acknowledged. Long-term agreements (LTAs) are used by
the Company and certain of its customers to reduce their supply uncertainty for a period of time, typically multiple years. While these
LTAs define commercial terms including pricing, termination rights and other contractual requirements, they do not represent the contract
with the customer for revenue recognition purposes.

Approximately 98% and 97%
of the Company’s revenue was generated from the sale of products to customers in the industrial and aerospace/defense markets for
each of the years ended April 1, 2023 and April 2, 2022, respectively. During fiscal 2023, approximately 2% of the Company’s revenue
was derived from services performed for customers, which included repair and refurbishment work performed on customer-controlled assets
as well as design and test work, compared to approximately 3% for fiscal 2022.

Refer to Note 2 – “Summary
of Significant Accounting Policies” for further discussion regarding the Company’s revenue policy.

Cost of Sales

Cost of sales includes employee
compensation and benefits, raw materials, outside processing, depreciation of manufacturing machinery and equipment, supplies and manufacturing
overhead.

22

Less than half of our factory
costs, depending on product mix, are attributable to raw materials, purchased components and outside processing. When we experience raw
material inflation, we attempt to offset these cost increases by changing our buying patterns, expanding our vendor network and passing
through price increases when possible. Although we experienced cost inflation on raw material for this fiscal year, we were able to mitigate
it through pricing and strategic sourcing efforts.

We monitor gross margin performance
through a process of monthly operation reviews with all our divisions. We develop new products to target certain markets allied to our
strategies by first understanding volume levels and product pricing and then constructing manufacturing strategies to achieve defined
margin objectives. We only pursue product lines where we believe that the developed manufacturing process will yield the targeted margins.
Management monitors gross margins of all product lines on a monthly basis to determine which manufacturing processes or prices should
be adjusted.

Fiscal 2023 Compared to Fiscal 2022

Results of Operations

(dollars in millions)

Net sales for the fiscal year
ended April 1, 2023 increased $526.4, or 55.8%, for fiscal 2023 compared to fiscal 2022. This increase in net sales was the result of
an 85.0% increase in our Industrial segment, while sales in our Aerospace/Defense segment increased 12.8% year over year. Included in
the increase in our Industrial segment was the impact of the Dodge acquisition, which contributed $743.1 of sales during the year. Excluding
the impact of Dodge, total net sales increased 11.5%, and Industrial sales increased 9.8% year over year. The increase in Industrial segment
sales reflects a pattern of sustained growth during the year, led by results in semiconductor, mining, energy, and general industrial
markets. Within Aerospace/Defense, total commercial aerospace increased 25.4% and defense decreased 7.1% year over year. The commercial
aerospace increase reflects the recovery in the market over the last year, and the start of a growth cycle as aircraft build rates at
large OEMs escalate in coming years.

Net income attributable to common stockholders
increased by $101.1 to $143.8 for fiscal 2023 compared to fiscal 2022. The net income attributable to common stockholders of $143.8 in
fiscal 2023 was impacted by $8.8 of transition service agreement (TSA) costs associated with the Dodge acquisition, $2.7 of restructuring
and consolidation charges incurred at some of our plants located in South Carolina, $76.7 of interest expense, $22.9 of preferred stock
dividends and $43.0 of income tax expense. The net income attributable to common stockholders of $42.7 in fiscal 2022 was impacted by
$13.8 of inventory purchase accounting adjustments associated with the Dodge acquisition, $30.6 of other costs associated with the Dodge
acquisition, $41.5 of interest expense, $12.0 of preferred stock dividends and $24.0 of income tax expense.

Gross Margin

Gross margin was 41.2% of sales for fiscal 2023
compared to 37.9% for the same period last year. Gross margin during fiscal 2023 included $0.2 of inventory rationalization costs associated
with consolidation efforts at one of our facilities located in South Carolina. Gross margin in fiscal 2022 included the unfavorable impact
of $13.8 of purchase accounting adjustments associated with the Dodge acquisition and $0.9 of other inventory rationalization costs associated
with consolidation efforts at one of our facilities. The expansion in margin during fiscal 2023 reflects the combination of continued
cost efficiencies achieved through integration, product mix, pricing and the ability to maintain appropriate pricing levels while facing
an inflationary environment both as it relates to manufacturing costs and human capital.

23

Selling, General and Administrative

SG&A expenses increased
by $62.1 to $229.7 for fiscal 2023 compared to fiscal 2022. Included in the fiscal 2023 result is $97.9 of costs from the Dodge business,
while fiscal 2022 only included five months of costs. As a percentage of sales, SG&A decreased more than 200 basis points, which was
driven by efficiencies achieved through the integration of Dodge as well as a decrease of $18.9 of stock-based compensation year over
year.

Other, Net

Other operating expenses
for fiscal 2023 totaled $82.1 compared to $68.4 for fiscal 2022. For fiscal 2023, other operating expenses were comprised of $8.9 of
TSA costs and other costs associated with the Dodge acquisition, $69.1 of amortization expense, $2.5 of plant consolidation and
restructuring costs, $0.8 of bad debt expense, $0.3 of asset impairments, $0.3 of losses on disposal of assets, and $0.2 of other
items. For fiscal 2022, other operating expenses were comprised of $30.6 of costs associated with the Dodge acquisition, $34.7 of
amortization expense, $1.1 of plant consolidation and restructuring costs, $0.5 of bad debt expense, $0.3 of losses on disposal of
assets, and $1.2 of other items.

Interest Expense, Net

Interest expense, net, generally
consists of interest charged on our debt and amortization of debt issuance costs offset by interest income (see “Liquidity and
Capital Resources – Liquidity” below). Interest expense, net was $76.7 for fiscal 2023 compared to $41.5 for fiscal 2022.
This included amortization of debt issuance costs of $7.2 for fiscal 2023 and $18.9 for fiscal 2022. Included in the debt issuance cost
amortization in fiscal 2022 was $16.6 associated with the fees for a $2,800.0 bridge commitment obtained in connection with the Dodge
acquisition. The increase in interest expense is primarily attributable to the Company now having a full twelve months of interest expense
associated with the financing secured to acquire Dodge on November 1, 2021 as well as the impact of rising interest rates over the last
twelve months.

Other Non-Operating Expense

Other non-operating
expense for fiscal 2023 totaled $6.6, consisting primarily of costs associated with post-retirement benefit plans led by a $4.3
settlement loss related to the derecognition of $15.6 of pension liabilities and $15.6 of pension assets resulting from an annuity
contract executed in March 2023. Refer to Part II, Item 8, Note 15 for further details of this transaction.

Income Taxes

Income tax expense for
fiscal 2023 was $43.0 compared to $24.0 for fiscal 2022. Our effective income tax rate for fiscal 2023 was 20.5% compared to 30.5%
for fiscal 2022. The effective income tax rates are different from the U.S. statutory rate due to the U.S. credits for increasing
research activities and foreign-derived intangible income provision which decrease the rate and differences in foreign and state
income taxes which increase the rate. Further, in fiscal 2022, the effective tax rate was negatively impacted by tax impacts
associated with acquisition costs and increases in tax reserves associated with Section 162(m) of the Internal Revenue Code. The
effective income tax rate for fiscal 2023 of 20.5% included discrete items of $5.1 of benefit comprised substantially of a benefit
associated with stock-based compensation and a reduction in unrecognized tax benefits partially due to the expiration of the
statute of limitations. The effective income tax rate for fiscal 2023 without these discrete items would have been 22.9%. The effective income
tax rate for fiscal 2022 of 30.5% included discrete items of $1.5 benefit which are comprised substantially of a benefit associated
with stock-based compensation and unrecognized tax benefits associated with the expiration of statutes of limitations, partially
offset by tax expense arising from an increase in the valuation allowance on a capital loss carryforward. The effective income tax
rate for fiscal 2022 without these discrete items would have been 32.4%.

24

Segment Information

We report our financial results
under two operating segments: Aerospace/Defense and Industrial. We use gross margin as the primary measurement to assess the financial
performance of each reportable segment.

Aerospace/Defense Segment:

Net sales increased $48.8,
or 12.8%, for fiscal 2023 compared to fiscal 2022. Commercial aerospace increased 25.4% year over year. Commercial
aerospace OEM sales increased 25.2% while commercial distribution and aftermarket increased approximately 26.0% year over year. During
the year, we saw improvement in the sales and orders to our commercial aerospace customers as aircraft build rates continued to grow.
Our backlog and recent results reflect the early stages of this process which we expect to continue to see in upcoming quarters. Our
defense markets, which represented about 31.8% of sales, decreased by approximately 7.1% during the period. Orders in the defense end
market have been steady, however, the timing of shipments on orders for some of our marine customers has shifted into future quarters
which negatively impacted our sales for fiscal 2023. Overall distribution and aftermarket sales, which represent 18.3% of segment sales,
were up 16.4% year over year.

Gross margin was $171.0,
or 39.7% of sales, in fiscal 2023 compared to $155.1, or 40.7% of sales, for the same period in fiscal 2022. Gross margin for fiscal
2022 was impacted by approximately $0.9 of inventory rationalization costs associated with consolidation efforts at one of our
facilities. We anticipate margin expansion in the next year as the increasing orders on commercial products add volume through our
plants driving cost efficiencies.

Industrial Segment:

Net sales increased
$477.6, or 85.0%, during fiscal 2023 compared to the same period last year. The increase was primarily due to the inclusion of a
full twelve months of Dodge sales in fiscal 2023 and continued strong performance across the majority of our industrial markets.
Excluding Dodge sales of $743.1, net sales increased by $26.3, or 9.8%, period over period. This increase was driven by performance
in semiconductor, energy, mining, and the general industrial markets. Sales to distribution and the aftermarket reflected more than
66.0% of our industrial sales during the year. These distribution and aftermarket sales increased 113.9% compared to the same period
in the prior year, and 4.5% on an organic basis.

Gross margin was $433.8, or 41.8% of sales, in
fiscal 2023 compared to $202.0, or 36.0% of sales, for the same period in fiscal 2022. The gross margin for the fiscal 2023 included the
unfavorable impact of $0.2 associated with inventory rationalization costs at one of our plants in South Carolina. The gross margin for
the fiscal 2022 included the unfavorable impact of $13.8 of inventory purchase accounting adjustments associated with the Dodge acquisition.
The expansion in margin year over year was led by cost efficiencies achieved through integration, product mix, pricing and the ability
to maintain appropriate pricing levels while facing an inflationary environment both as it relates to manufacturing costs and human capital.

25

Corporate:

Corporate SG&A decreased
$3.9 or 4.9% for fiscal 2023 compared to fiscal 2022 due to decreases in stock-based compensation partially offset by increases in personnel-related
costs.

Liquidity and Capital Resources

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, 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 New 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 II, Item 8 –
Notes 9, 12 and 17.

Our ability to meet future
working capital, capital expenditures 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, relocate, 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 April 1, 2023, we had cash and cash equivalents
of $65.4, of which, approximately $34.0 was cash held by our foreign operations. 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. As discussed in
further detail below, we also have the ability to borrow money from our existing credit facilities.

Domestic Credit Facility

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 $1,300.0 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 $500.0 revolving credit 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 and are
being amortized over the life of the New Credit Agreement. When the 2015 Credit Agreement was terminated the Company wrote off
$0.9 of previously unamortized debt issuance costs.

Prior to December 2022, amounts
outstanding under the Facilities generally bear interest at either, at the Company’s option, (a) a base rate determined by reference
to the higher of (i) Wells Fargo’s prime lending rate, (ii) the federal funds effective rate plus 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 (as defined within the New Credit Agreement) from
time to time. In December 2022 the New Credit Agreement was amended to replace LIBOR with the secured overnight financing rate administered
by the Federal Reserve Bank of New York (“SOFR”) so that borrowings under the Facilities denominated in U.S. dollars bear
interest at a rate per annum equal to Term SOFR (as defined in the New Credit Agreement) plus a credit spread adjustment of 0.10% plus
a margin ranging from 0.75% to 2.00% depending on the Company’s consolidated ratio of total net debt to consolidated EBITDA. The
Facilities are subject to a SOFR floor of 0.00%. As of April 1, 2023, the Company’s margin was 1.25% for SOFR loans; and the commitment
fee rate was 0.20% and the letter of credit fee rate was 1.25%. A portion of the Term Loan Facility is subject to a fixed- rate interest
swap as discussed below under “Interest Rate Swap.”

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The Term Loan Facility will
mature in November 2026 and amortizes in quarterly installments with the balance payable on the maturity date. The Company can elect
to prepay some or all of the outstanding balance from time to time without penalty, which will offset future quarterly amortization installments.
Due to prepayments previously made, the required future principal payments on the Term Loan Facility are $0 for fiscal 2024, $0 for fiscal
2025, $0 for fiscal 2026, and approximately $900.0 for fiscal 2027. The Revolving Credit Facility will expire in November 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 the following financial covenants: (a) a maximum Total Net Leverage
Ratio (as defined within the New Credit Agreement) 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 period of twelve (12) months after the
consummation of a material acquisition), and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of April 1, 2023, the Company was
in compliance with all debt covenants.

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’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.

As of April 1, 2023, $900.0
was outstanding under the Term Loan Facility and approximately $3.7 of the Revolving Credit Facility was being utilized to provide letters
of credit to secure the Company’s obligations relating to certain insurance programs, and the Company had the ability to borrow
up to an additional $496.3 under the Revolving Credit Facility.

Senior Notes

On October 7, 2021, RBCA
issued $500.0 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 after deducting initial purchasers’ 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.

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.

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.

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Foreign Borrowing Arrangements

One of our foreign subsidiaries,
Schaublin SA (“Schaublin”), entered into two separate credit agreements in 2019 with Credit Suisse (Switzerland) Ltd. (the
“Foreign Credit Agreements”) to (i) finance the acquisition of our Swiss Tool business unit, and (ii) provide future working
capital. The Foreign Credit Agreements provided Schaublin with a CHF 15.0 (approximately $15.4) term loan, which was extinguished in
February 2022, and a CHF 15.0 (approximately $15.4) revolving credit facility, which was terminated in October 2022. Schaublin now has
a separate CHF 5.0 (approximately $5.4 USD) revolving credit facility (the “New Foreign Revolver”) with Credit Suisse to
provide future working capital, if necessary. As of April 1, 2023, $0.1 had been borrowed from the New Foreign Revolver. Fees associated
with the New Foreign Revolver are nominal.

Interest Rate Swap

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. The Swap was executed to protect the Company from interest rate volatility on our variable-rate Term
Loan Facility. The Swap became effective December 30, 2022 and is comprised of a $600.0 notional with a maturity of three years. We receive
a variable rate based on one-month Term SOFR and pay a fixed rate of 4.455%. As of April 1, 2023, approximately 78.5% of our debt bears interest
at a fixed rate. The notional on the Swap will amortize as follows:

Year 1: $600.0

Year 2: $400.0

Year 3: $100.0

The Swap has been designated
as a cash flow hedge of the variability of the first unhedged interest payments (the hedged transactions) paid over the hedging relationship’s
specified time period of three years attributable to the borrowing’s contractually specified interest index on the hedged principal
of its general borrowing program or replacement or refinancing thereof.

Cash Flows

Fiscal 2023 Compared to Fiscal 2022

The following table summarizes our
cash flow activities:

During fiscal 2023 we
generated cash of $220.6 from operating activities compared to $180.3 for fiscal 2022. The increase of $40.3 for fiscal 2023 was
mainly the result of a $112.0 increase in net income, partially offset by a $2.0 decrease in non-cash activity and a net unfavorable
change in operating assets and liabilities of $69.7. The unfavorable change in operating assets and liabilities is detailed in the
table below. The change in non-cash activity was primarily driven by $49.9 more depreciation and amortization and $1.4 more noncash
operating lease expense, partially offset by $18.9 less stock-based compensation, $21.6 less in deferred taxes, $11.7 less
amortization of deferred financing costs, $1.0 less in debt extinguishment costs, and $0.1 decrease in
consolidation and restructuring charges.

The following chart summarizes the unfavorable
change in operating assets and liabilities of $69.7 for fiscal 2023 versus fiscal 2022 and the favorable change of $1.4 for fiscal 2022
versus fiscal 2021.

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During fiscal 2023, we used
$14.0 for investing activities as compared to $2,847.5 for fiscal 2022. This decrease in cash used was attributable to $2,935.7 less
cash used for acquisitions, $30.0 less purchases of marketable securities and $0.5 more proceeds from the sale of assets, partially offset
by a $12.2 increase in capital expenditures and $120.5 less in proceeds from the sale of marketable securities.

During fiscal 2023, we used
cash of $322.8 for financing activities compared to $2,698.5 cash generated in fiscal 2022. This decrease from cash generated to cash
used was primarily attributable to proceeds received during fiscal 2022 of $605.5 from the issuance of common stock, $445.3 from the issuance
of preferred stock, $1,285.8 from the Term Loan Facility, and $494.2 from the Senior Notes. During fiscal 2023 there were $187.0 more
payments made on outstanding debt, $15.8 more cash dividends paid on preferred stock, $6.4 fewer exercises of stock-based awards, and
$1.6 more in principal payments made on finance lease obligations, partially offset by $19.4 less in finance fees paid in connection with
credit facilities and senior notes and $0.9 fewer repurchases of common stock.

Capital Expenditures

Our capital expenditures
in fiscal 2023 were $42.0 compared to $29.8 in fiscal 2022. We expect to make capital expenditures of approximately 3.0% to 3.5% of net
sales during fiscal 2024 in connection with our existing business. We funded our fiscal 2023 capital expenditures, and expect to fund
fiscal 2024 capital expenditures, principally through existing cash and internally generated funds. We may also make substantial additional
capital expenditures in connection with acquisitions.

Quarterly Results of Operations

Critical Accounting Policies and Estimates

Our discussion and analysis
of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets
and liabilities. We evaluate our estimates on an on-going basis. Estimates are used for, but not limited to, the accounting for the allowance
for doubtful accounts, valuation of inventories, goodwill and intangible assets, depreciation and amortization, income taxes and tax
reserves, the valuation of options and the valuation of business combinations. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We believe our judgments
related to these accounting estimates are appropriate. Actual results may differ from these estimates under different assumptions or
conditions.

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Revenue Recognition.
The performance obligations for the majority of RBC’s product
sales are satisfied at the point in time in which the products are shipped. The Company has determined that the customer obtains control
upon shipment of the product based on the shipping terms (i.e. when it ships from RBC’s dock or when the product arrives at the
customer’s dock) and recognizes revenue when control has transferred to the customer. Once a customer has obtained control, the
customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. Approximately
98% of the Company’s revenue was recognized in this manner based on sales for the year ended April 1, 2023 compared to approximately
97% for the year ended April 2, 2022.

The Company has determined
performance obligations are satisfied over time for customer contracts where RBC provides services to customers and also for a limited
number of product sales. RBC has determined revenue recognition over time is appropriate for our service revenue contracts as they create
or enhance an asset that the customer controls throughout the duration of the contract. Approximately 2% of the Company’s revenue
was recognized in this manner based on sales for the year ended April 1, 2023 compared to approximately 3% for the year ended April 2,
2022. Revenue recognition over time is appropriate for customer contracts with product sales in which the product sold has no alternative
use to RBC without significant economic loss and an enforceable right to payment exists, including a normal profit margin from the customer,
in the event of contract termination. These types of contracts comprised less than 1% of total sales for the year ended April 1, 2023
and the year ended April 2, 2022. For both of these types of contracts, revenue is recognized over time based on the extent of progress
towards completion of the performance obligation. The Company utilizes the cost-to-cost measure of progress for over-time revenue recognition
contracts as we believe this measure best depicts the transfer of control to the customer, which occurs as we incur costs on contracts.
Revenues, including profits, are recorded proportionally as costs are incurred. Costs to fulfill include labor, materials, subcontractors’
costs, and other direct and indirect costs.

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. Contract assets are included within prepaid expenses and other current assets or other noncurrent assets
on the consolidated balance sheets.

Inventory. Inventory is stated at the lower
of cost or net realizable value. Cost is determined by the first-in, first-out method. We account for inventory under a full absorption
method. We record adjustments to the value of inventory based upon past sales history and forecasted plans to sell our inventories. The
physical condition, including age and quality, of the inventories is also considered in establishing its valuation. These adjustments
are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions,
customer inventory levels or competitive conditions differ from our expectations.

Goodwill and Indefinite-Lived
Intangible Assets. Goodwill (representing the excess of the amount paid to acquire a company over the estimated fair value of the
net assets acquired) and indefinite lived intangible assets are not amortized but instead are tested for impairment annually, or when
events or circumstances indicate that the carrying value of such asset may not be recoverable. Separate tests are performed for goodwill
and indefinite lived intangible assets. We completed a quantitative test of impairment on the indefinite lived intangible assets with
no impairment noted in the current year. The determination of any goodwill impairment is made at the reporting unit level. The Company
determines the fair value of a reporting unit and compares it to its carrying amount. If the carrying amount of the reporting unit exceeds
its fair value, an impairment loss is recognized for any amount by which the carrying amount exceeds the reporting unit’s fair value.
The Company applies the income approach (discounted cash flow method) in testing goodwill for impairment. The key assumptions used in
the discounted cash flow method used to estimate fair value include discount rates, revenue growth rates, terminal growth rates and cash
flow projections. Discount rates, revenue growth rates and cash flow projections are the most sensitive and susceptible to change as they
require significant management judgment. Discount rates are determined by using a weighted average cost of capital (“WACC”).
The WACC considers market and industry data as well as Company-specific risk factors for each reporting unit in determining the appropriate
discount rate to be used. The discount rate utilized for each reporting unit for our fiscal 2023 test was 10.0% and is indicative of the
return an investor would expect to receive for investing in such a business. Terminal growth rate determination follows common methodology
of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant WACC and long-term
growth rates. The terminal growth rate used for our fiscal 2023 test was 2.5%. The Company has determined that, to date, no impairment
of goodwill exists and the aggregate fair value of the reporting units exceeded the carrying value in total by approximately 42.5%. The
fair value of the reporting units exceeds the carrying value by a minimum of 13.1% at each of the two reporting units. A decrease of 1.0%
in our terminal growth rate would not result in impairment of goodwill for any of our reporting units. An increase of 1.0% in our discount
rate would not result in impairment of goodwill for any of our reporting units. The Company performs the annual impairment testing during
the fourth quarter of each fiscal year. Although no changes are expected, if the actual results of the Company are less favorable than
the assumptions the Company makes regarding estimated cash flows, the Company may be required to record an impairment charge in the future.

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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 estimated 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 which
are prepared with the assistance of a specialist and consider our best estimates of inputs and assumptions that a market participant would
use. We utilize a specialist for these valuations due to the complexity and estimation uncertainty involved in determining the fair value
given the significant assumptions involved. Significant assumptions utilized in the valuation models include discount rates, revenue growth
rates and cash flow projections. 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.

Income Taxes. As part
of the process of preparing the consolidated financial statements, we are required to estimate the income taxes in each jurisdiction
in which we operate. This process involves estimating the actual current tax liabilities together with assessing temporary differences
resulting from the differing treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets
and liabilities, which are included in the consolidated balance sheets. We must then assess the likelihood that the deferred tax assets
will be recovered, and to the extent that we believe that recovery is not more than likely, we are required to establish a valuation
allowance. If a valuation allowance is established or increased during any period, we are required to include this amount as an expense
within the tax provision in the consolidated statements of operations. Significant judgment is required in determining our provision
for income taxes, deferred tax assets and liabilities, accrual for uncertain tax positions and any valuation allowance recognized against
net deferred tax assets.

Recent Accounting Pronouncements

For a discussion of recent
accounting pronouncements, see Note 2 – “Summary of Significant Accounting Policies – Recent Accounting Pronouncements.”

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Impact of Inflation and Changes in Prices of
Raw Materials

In fiscal 2023, the economy
experienced inflation. We purchase steel at market prices, which fluctuate as a result of supply and demand in the marketplace. To date,
we have managed price increases by changing our buying patterns, expanding our vendor network, and passing increases on to our customers
through price increases on our products, the assessment of steel surcharges on our customers, or entry into long-term agreements with
our customers containing escalator provisions tied to our invoiced price of steel. However, even if we are able to pass these steel surcharges
or price increases to our customers, there may be a time lag of several months between the time a price increase goes into effect and
our ability to implement surcharges or price increases, particularly for orders already in our backlog. As a result, our gross margin
percentage may decline.

Competitive pressures and
the terms of certain of our long-term contracts may require us to absorb at least part of these cost increases, particularly during periods
of high inflation. Our principal raw materials are stainless and 52100 wire and rod steel (types of high alloy steel), which have historically
been readily available. We have never experienced a work stoppage due to a supply shortage. We maintain multiple sources for raw materials
including steel and have various supplier agreements. Through sole-source arrangements, supplier agreements and pricing, we have been
able to minimize our exposure to fluctuations in raw material prices.

Our suppliers and sources
of raw materials are based in the U.S., Europe and Asia. We believe that our sources are adequate for our needs in the foreseeable
future, that there exist alternative suppliers for our raw materials and that in most cases readily available alternative materials can
be used for most of our raw materials.

Off-Balance Sheet Arrangements

The Company has $3.7 of outstanding
standby letters of credit, all of which are under the Revolving Credit Facility. We also have a contractual obligation for licenses related
to the implementation and upgrade of an enterprise resource planning (“ERP”) system for Dodge. These license costs of $10.5
will be incurred over a five-year period.

Other than the items noted
above, we had no significant off-balance sheet arrangements as of April 1, 2023.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The financial and business
analysis below provides information which we believe is relevant to an assessment and understanding of our consolidated financial position,
results of operations and cash flows. This financial and business analysis should be read in conjunction with the consolidated financial
statements and related notes. All references to “Notes” in this Item 7 refer to the “Notes to Consolidated Financial
Statements” included in Item 8 of this Annual Report on Form 10-K.

The following discussion
contains statements reflecting our views about our future performance that constitute “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. See the information provided
in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K under the heading “Cautionary Statement as to
Forward-Looking Information.”

We have omitted our discussion
of fiscal 2020 from this section as permitted by Regulation S-K. Discussion and analysis of our financial condition and results of operations
for fiscal 2020 can be found within Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” of our Annual Report on Form 10-K filed with the SEC on May 21, 2021.

Overview

We are a well-known international
manufacturer of highly engineered precision bearings, components and essential systems for the industrial, defense and aerospace industries.
Our precision solutions are integral to the manufacture and operation of most machines and mechanical systems, reduce wear to moving parts,
facilitate proper power transmission, and reduce damage and energy loss caused by friction. While we manufacture products in all major
bearing categories, we focus primarily on the higher end of the bearing market where we believe our value-added manufacturing and engineering
capabilities enable us to differentiate ourselves from our competitors and enhance profitability. We believe our unique expertise has
enabled us to garner leading positions in many of the product markets in which we primarily compete. With 56 facilities in 10 countries,
of which 37 are manufacturing facilities, we have been able to significantly broaden our end markets, products, customer base and geographic
reach. We have a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy, fiscal
year 2022 had 52 weeks and fiscal year 2021 had 53 weeks. We currently operate under two reportable business segments – Aerospace/Defense
and Industrial:

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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/Defense and 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 highly-engineered bearings and precision components through the following
efforts:

We have demonstrated expertise in acquiring and
integrating bearing and precision engineered component manufacturers that have complementary products or distribution channels and have
provided significant margin enhancement. We have consistently increased the profitability of acquired businesses through a process of
methods and systems improvement coupled with the introduction of complementary and proprietary new products. Since 1992 we have completed
27 acquisitions, which have broadened our end markets, products, customer base and geographic reach.

Recent Significant Events

Acquisition of Dodge

On November 1, 2021, the Company purchased 100% of the capital stock
of Dodge Mechanical Power Transmission Company Inc. (now known as Dodge Industrial, Inc.), and certain other assets relating to ABB Asea
Brown Boveri Ltd’s mechanical power transmission business. Collectively, this acquired business is referred to as “Dodge.”
The purchase price was approximately $2,908.2 million, net of cash acquired and subject to certain adjustments. The purchase price was
paid with a mix of financing and cash on hand. Financing for the Dodge acquisition is discussed further within the “Liquidity and
Capital Resources” section below.

With offices in Greenville, South Carolina, Dodge is a leading manufacturer
of mounted bearings, gearings, motion control products 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.

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Outlook

Our net sales increased 54.8%
year over year due to an increase of 163.9% in Industrial sales partially offset by a 3.7% decrease in aerospace and defense sales. Approximately
$291.9 million of the Industrial sales were from the Dodge business. Excluding those sales, Industrial sales increased 26.7% year over
year, reflecting sustained growth across many different areas. Highlights included our mining business, which increased more than 50%
year over year, oil and gas, semiconductor, and general industrial markets.

Aerospace and defense decreased
3.7% year over year. Commercial aerospace decreased 1.5%, despite demonstrating early signs of recovery during the second half of the
year. Defense sales, which represent approximately 39.0% of segment sales during the year, were down more than 7% for the year, driven
by marine and aerospace markets. The recovery in the commercial aerospace industry has proven slower than anticipated, but the order
rate in recent months signals a positive sign as we look toward fiscal 2023.

For the twelve months
ended April 2, 2022, approximately 60% of our net sales were attributable to the Industrial segment while the aerospace/defense
segment contributed approximately 40% of our net sales. For the fourth quarter of fiscal 2022, approximately 71.0% of our net sales
were attributable to the Industrial segment compared to approximately 29.0% for the aerospace/defense segment. This shift in mix is
primarily due to $181.9 million of sales attributable to the Dodge business in the fourth quarter. Approximately 66.0% of Industrial
sales in the fourth quarter were to distribution and aftermarket while approximately 34.0% were made directly to OEM’s.
Approximately 36.0% of our aerospace/defense sales were to the defense market. The Company expects net sales to be approximately
$355.0 million to $365.0 million in the first quarter of fiscal 2023, compared to $156.2 million in the prior year, which represents
a growth rate of 127.3% to 133.7%.

We ended fiscal 2022 with
a backlog of $603.1 million compared to $394.8 million for the same period last year, representing a 53% increase year over year. This
increase reflects the benefits of the acquisition of the Dodge business, as well as an increase in aerospace orders during the period.

We experienced solid operating
cash flow generation during fiscal 2022 (as discussed in the section “Liquidity and Capital Resources” below). With the addition
of Dodge, we expect this trend to continue during fiscal 2023 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 II, Item 8 – Notes 8, 11 and 15. As of April 2, 2022, we had cash and cash equivalents of $182.9
million, of which, approximately $34.9 million was cash held by our foreign operations.

Sources of Revenue

A contract with a customer
exists when there is commitment and approval from both parties involved, the rights of the parties are identified, payment terms are
defined, the contract has commercial substance and collectability of consideration is probable. The Company has determined that the contract
with the customer is established when the customer purchase order is accepted or acknowledged. Long-term agreements (LTAs) are used by
the Company and certain of its customers to reduce their supply uncertainty for a period of time, typically multiple years. While these
LTAs define commercial terms including pricing, termination rights and other contractual requirements, they do not represent the contract
with the customer for revenue recognition purposes.

Approximately 97% and 96%
of the Company’s revenue was generated from the sale of products to customers in the industrial and aerospace/defense markets for
each of the years ended April 2, 2022 and April 3, 2021, respectively. During fiscal 2022, approximately 3% of the Company’s revenue
was derived from services performed for customers, which included repair and refurbishment work performed on customer-controlled assets
as well as design and test work, compared to approximately 4% for fiscal 2021.

Refer to Note 2 – “Summary
of Significant Accounting Policies” for further discussion regarding the Company’s revenue policy.

Cost of Sales

Cost of sales includes employee
compensation and benefits, raw materials, outside processing, depreciation of manufacturing machinery and equipment, supplies and manufacturing
overhead.

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Less than half of our factory
costs, depending on product mix, are attributable to raw materials, purchased components and outside processing. When we experience raw
material inflation, we attempt to offset these cost increases by changing our buying patterns, expanding our vendor network and passing
through price increases when possible. Although we experienced cost inflation on raw material for this fiscal year, we were able to mitigate
it through pricing and strategic sourcing efforts.

We monitor gross margin performance
through a process of monthly operation reviews with all our divisions. We develop new products to target certain markets allied to our
strategies by first understanding volume levels and product pricing and then constructing manufacturing strategies to achieve defined
margin objectives. We only pursue product lines where we believe that the developed manufacturing process will yield the targeted margins.
Management monitors gross margins of all product lines on a monthly basis to determine which manufacturing processes or prices should
be adjusted.

Fiscal 2022 Compared to Fiscal 2021

Results of Operations

Net sales for the twelve
months ended April 2, 2022 increased $333.9 million, or 54.8%, for fiscal 2022 compared to fiscal 2021. This increase in net sales was
the result of a 163.9% increase in our Industrial segment, while sales in our Aerospace/Defense segment declined 3.7% year over year.
Included in the increase in our Industrial segment was the impact of the Dodge acquisition, which contributed $291.9 million of sales
during the year. Excluding the impact of Dodge, total net sales increased 6.9%, and Industrial sales increased 26.7% year over year.
The increase in industrial sales reflects a pattern of sustained growth during the year, led by results in semiconductor, mining, energy,
and general industrial markets. Within Aerospace/Defense, total commercial aerospace decreased 1.5% and defense decreased 7.1% year over
year. The decrease was mitigated during the second half of the year as conditions began to improve in the commercial aerospace business,
driving increased sales.

Net income available to common stockholders decreased by $36.5 million
to $53.1 million for fiscal 2022 compared to fiscal 2021. The net income available to common stockholders of $53.1 million in fiscal 2022
was impacted by $13.8 million of inventory purchase accounting adjustments associated with the Dodge acquisition, $30.6 million of other
costs associated with the Dodge acquisition, $41.5 million of interest expense, $12.0 million of preferred stock dividends and $22.7 million
of tax expense. The net income available to common stockholders of $89.6 million in fiscal 2021 was impacted by $7.3 million of pre-tax
costs associated with restructuring, $1.5 million of costs associated with the cyber event, $0.2 million of losses on foreign exchange,
and $20.4 million of tax expense.

Gross Margin

Gross margin was 37.9% of
sales for fiscal 2022 compared to 38.4% for the same period last year. Gross margin during fiscal 2022 included the unfavorable impact
of $13.8 million of purchase accounting adjustments associated with the Dodge acquisition and $0.9 million of other inventory rationalization
costs associated with consolidation efforts at one of our facilities. Gross margins in fiscal 2021 were impacted by $3.1 million of inventory
rationalization costs associated with the consolidation of certain manufacturing facilities and $0.8 million of capacity inefficiencies
driven by the decrease in volume.

Selling, General and Administrative

SG&A expenses increased
by $52.6 million to $158.6 million for fiscal 2022 compared to fiscal 2021. Included in the fiscal 2022 result is $34.6 million of costs
from the Dodge business. The remainder of the increase is primarily associated with an increase in personnel costs year over year.

28

Other, Net

Other operating expenses for
fiscal 2022 totaled $68.4 million compared to $16.7 million for fiscal 2021. For fiscal 2022, other operating expenses were comprised
of $30.6 million of costs associated with the Dodge acquisition, $34.7 million of amortization expense, $1.1 million of plant consolidation
and restructuring costs, $0.5 million of bad debt expense, $0.3 million of losses on disposal of assets, and $1.2 million of other items.
For fiscal 2021, other operating expenses were comprised of $10.2 million of amortization of intangible assets, $2.9 million of restructuring
and consolidation costs, $1.5 million of forensic specialist and remediation costs related to a cyber event, $1.3 million loss on disposal
of assets, $0.5 million of bad debt expense, and $0.3 million of other items.

Interest Expense, Net