RBC Bearings Deleveraging Boosts Credit Rating

Ed Don | January 26, 2026 | 0

Snack-Sized Version:

RBC Bearings showcases strong financial health through impressive free cash flow generation. The company is effectively using this cash to pay down debt from its Dodge acquisition. For instance, its initial $1.3 billion term loan was reduced to $328 million as of late 2025. Consequently, this rapid deleveraging has improved its credit profile significantly. S&P Global Ratings recently upgraded the company’s issuer credit rating to ‘BB+’. This reflects growing confidence in RBC’s strategy. In addition, strong demand from aerospace and defense customers continues to fuel the company’s performance and margin expansion.

At a Glance
Headline	Strong Cash Flow and Debt Reduction
Key fact	Reduced a $1.3 billion term loan to $328 million as of September 30, 2025, following the Dodge acquisition.
Why it matters	Rapidly paying down debt improves financial stability and has led to a credit rating upgrade from S&P Global.
Watch next	Monitor continued debt repayment and free cash flow conversion in upcoming quarterly reports.

Source: Company news; SEC filings.

Read the Full Meal:

RBC Bearings is demonstrating robust operational performance, which is highlighted by its significant free cash flow. The company has prioritized using this financial strength to address the debt from its acquisition of Dodge. As a result, S&P Global Ratings upgraded RBC’s credit rating, citing strong performance and consistent debt reduction. The firm’s leverage has improved meaningfully since the transaction. Furthermore, demand from the commercial aerospace and defense sectors has bolstered its results. This allows the company to reinvest in the business while strengthening its balance sheet. Ultimately, this strategy positions RBC for sustained growth and financial stability.

Deleveraging Success After Dodge Acquisition

Debt Reduction: The company reduced its initial $1.3 billion term loan to an outstanding balance of $328 million by September 2025.
Credit Rating: Due to strong performance and debt reduction, S&P Global Ratings raised RBC’s issuer credit rating to ‘BB+’ from ‘BB’.
Key Drivers: Performance was driven by strong demand from aerospace and defense customers, plus margin expansion in its Dodge business.
Leverage Improvement: Adjusted leverage improved to the 2x area from above 6x following the Dodge acquisition.

Why this can matter for NYSE:RBC holders

Financial Stability: Aggressively paying down acquisition-related debt strengthens the company’s balance sheet and reduces financial risk for investors.
Investor Confidence: A credit rating upgrade from a major agency like S&P signals growing external confidence in the company’s financial management.
Growth Capacity: Strong free cash flow provides the capacity to reinvest in the business or return capital to shareholders in the future.

For more details, see RBC SEC filings.

What to watch next

Debt Repayment: Look for the full repayment of the term loan, which S&P assumes will occur on or before its November 2026 maturity.
Quarterly Earnings: Monitor upcoming earnings reports for continued strength in free cash flow and updates on end-market demand.
Leverage Targets: Watch for management commentary on long-term leverage goals now that post-acquisition targets have been met.

Mini FAQ

What is driving RBC Bearings’ strong performance?
The company’s performance is driven by high demand from its commercial aerospace and defense customers, as well as margin expansion from its Dodge industrial business.

How has RBC Bearings managed its debt?
RBC has used its strong free cash flow to significantly pay down debt taken on for the Dodge acquisition, reducing a $1.3 billion term loan to $328 million by late 2025.

Why did S&P Global Ratings upgrade RBC Bearings?
S&P upgraded RBC’s credit rating because of its strong EBITDA and free cash flow growth, significant debt reduction, and improved leverage metrics since 2024.