Roll Big
Image: RBC Bearings.

Manufacturer RBC Bearings (NASDAQ:ROLL) is far from a household name for most investors, but the maker of engineered precision components and bearings has benefited greatly from demand from the aerospace, industrial, and defense sectors. Coming into its fiscal third-quarter financial report, RBC Bearings shareholders expected the good times to continue.

Even though defense and aerospace giant Boeing (NYSE:BA) posted results that scared some industry watchers about the potential for a pullback in the soaring sector, RBC showed no signs of seeing its period of strength come to an end. Let's take a closer look at how RBC Bearings fared last quarter and whether it can continue to grow.

RBC Bearings can't stop climbing
RBC Bearings' fiscal third-quarter results continued a long run of extremely ambitious gains. Revenue climbed almost 36%, to $144.2 million, matching the growth rate that most investors were expecting. Net income climbed a slightly slower 21%, to $17 million, and adjusted earnings came in at $0.73 per share, topping the consensus forecast by $0.01.

A deeper dive into RBC Bearings' numbers shows that the huge differences among the company's major segments continued through the end of 2015. Net sales to aerospace customers jumped by two-thirds, but revenue to industrial markets once again fell by just less than 1%. Engineered products saw more than fivefold growth from year-ago levels, and the plain bearings segment also showed solid sales gains of almost 20%. But revenue for the roller bearings and ball bearings segments fell 8%, to 16%.

The lightning-fast growth pace that RBC Bearings has sustained has come at the expense of margin growth. Adjusted gross margins would have dropped 1.7 percentage points, to 37.5%, after allowing for accounting adjustments, and operating margins would have dropped the same amount, to 19.2%. Nevertheless, RBC did a good job of keeping overhead expenses in check, limiting growth to 24%, and helping to keep operating margins from falling further.

CEO Michael Hartnett praised RBC's performance. "Continued strength in the aerospace sector in both commercial OEM and aftermarket activity was partially offset by softness in some industrial markets." Hartnett also said that the integration of its Sargent acquisition continues to proceed well.

Can RBC Bearings keep moving in the right direction?
As we've seen in recent quarters, backlogged business has started to flatten out, which could be of some concern to investors. As of the end of the quarter, RBC had $351.3 million in backlog. That's only about 1% higher than it was at the end of September, even though it's a more than 60% rise from year-end 2014.

The new question for RBC Bearings is whether recent troubles for Boeing will take away some of the positive momentum that the aerospace industry has brought to it lately. Boeing took a big one-time charge related to cuts in the production of its 747 jet, and many investors were disappointed by somewhat downbeat guidance that the aircraft manufacturer made for 2016. Boeing and rival Airbus have seen huge successes in recent years, which have filtered down to components makers like RBC Bearings; any threat to the long expansion in the aerospace industry could be detrimental to RBC's growth.

RBC Bearings shareholders reacted favorably to the news, sending the stock up 4% at midday following the announcement. As long as the company can keep capitalizing on favorable conditions in the industry, then RBC Bearings should remain strong, and should deliver solid growth to investors over time.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends RBC Bearings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.