We came across a bullish thesis on Regal Rexnord Corporation on Valueinvestorsclub.com by Sturges95. In this article, we will summarize the bulls’ thesis on RRX. Regal Rexnord Corporation 's share was trading at $147.29 as of September 4th. RRX’s trailing and forward P/E were 39.17 and 13.09, respectively according to Yahoo Finance. Is Loar Holdings Inc. (LOAR) The Stock With The Most Insider Sales In The Last Quarter? Suwin/Shutterstock.com Regal Rexnord Corporation (RRX) has transformed from a traditi ...

MILWAUKEE, Sept. 4, 2025 /PRNewswire/ -- Regal Rexnord Corporation (NYSE: RRX) today published its annual Sustainability Report, including progress towards its environmental goals. The report provides an update on how sustainability considerations are intertwined with the Company's growth strategy: Developing innovative products and sustainable solutions that customers value, while intentionally factoring environmental considerations into how they are designed and manufactured; Creating a workplace that inv ...

Company Leadership Transition - Regal Rexnord Corporation has appointed Kevin Long as Executive Vice President & President of the Automation & Motion Control segment, effective August 14, 2025, succeeding Kevin Zaba who will retire after 11 years with the company [1][2] - Kevin Zaba will remain with Regal Rexnord as EVP until December 31, 2025, to ensure a smooth transition [1] Kevin Long's Background - Kevin Long brings over 30 years of experience in leading global industrial businesses, with a strong track record in driving above-market growth and operational excellence [2] - Prior to joining Regal Rexnord, Long served as Group President at Dover Corporation, where he significantly grew the OPW business through organic execution and acquisitions [2] - Long has held senior leadership roles at Danaher Corporation, contributing to growth and operational synergies across multiple business units [3] Company Vision and Market Position - CEO Louis Pinkham expressed excitement about Long's appointment, highlighting his proven leadership and deep industrial experience as key factors for leading AMC's growth and innovation [4] - Long emphasized Regal Rexnord's strong portfolio and significant growth opportunities, indicating a customer-focused approach [4] - Regal Rexnord operates in various end markets, including discrete automation, food & beverage, aerospace, medical, data center, energy, residential and commercial buildings, general industrial, and metals and mining, benefiting from meaningful secular demand tailwinds [6][7] Company Overview - Regal Rexnord is comprised of three operating segments: Automation & Motion Control, Industrial Powertrain Solutions, and Power Efficiency Solutions [7] - The company is headquartered in Milwaukee, Wisconsin, and has manufacturing, sales, and service facilities worldwide [7]

Core Viewpoint - Regal Rexnord (NYSE: RRX) is considered to be significantly undervalued due to a combination of internal improvements and exposure to long-term growth trends in the industrial motion sector [1]. Company Analysis - The company has successfully repositioned itself into a broad-based industrial motion sector over the past few years, indicating strategic adaptability and growth potential [1]. Industry Trends - Regal Rexnord is benefiting from secular growth trends, which suggests that the industry is experiencing long-term positive changes that could enhance the company's market position [1].

Core Insights - Regal Rexnord (NYSE: RRX) has experienced a leverage overhang as organic growth has slowed down, despite undergoing significant transformation in recent years [1] Group 1: Company Overview - Regal Rexnord is facing challenges related to organic growth, which has prompted concerns about its leverage situation [1] Group 2: Investment Opportunities - The investment group "Value In Corporate Events" focuses on identifying actionable ideas related to major corporate events such as IPOs, mergers & acquisitions, and earnings reports [1]

[PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1 — Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201%20%E2%80%94%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) The unaudited statements present core financials and 16 detailed notes for Q2 and H1 2025 and 2024 [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2025 net sales decreased to $1,496.1 million, while net income increased to $79.2 million, driving higher diluted EPS Q2 & H1 2025 vs 2024 Income Statement Highlights (in Millions, Except Per Share Data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $1,496.1 | $1,547.6 | $2,914.2 | $3,095.3 | | **Gross Profit** | $564.7 | $571.0 | $1,092.3 | $1,124.1 | | **Income from Operations** | $182.3 | $193.9 | $342.0 | $327.8 | | **Net Income Attributable to Regal Rexnord** | $79.2 | $62.5 | $136.5 | $82.3 | | **Diluted EPS** | $1.19 | $0.94 | $2.05 | $1.23 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Q2 2025 comprehensive income surged to $290.8 million, driven by a significant positive foreign currency translation adjustment - A substantial positive foreign currency translation adjustment of **$209.6 million** in Q2 2025 was the main driver for the increase in comprehensive income[15](index=15&type=chunk) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $13.90 billion, while debt reduction drove total equity up to $6.71 billion Balance Sheet Comparison (in Millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $13,902.7 | $14,033.7 | | **Long-Term Debt** | $4,849.6 | $5,452.7 | | **Total Liabilities** | $7,194.8 | $7,766.5 | | **Total Equity** | $6,707.9 | $6,267.2 | [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity grew to $6.71 billion in H1 2025, driven by net income and other comprehensive income - The increase in total equity from **$6,267.2 million** at the end of 2024 to **$6,707.9 million** at June 30, 2025 was mainly due to net income and positive other comprehensive income, partially offset by dividends[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 operating cash flow increased significantly to $625.5 million, supporting debt repayments Cash Flow Summary for Six Months Ended June 30 (in Millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Operating Activities** | $625.5 | $241.4 | | **Investing Activities** | $(29.2) | $325.2 | | **Financing Activities** | $(686.2) | $(672.5) | | **Net Decrease in Cash** | $(73.4) | $(124.9) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures cover accounting policies, segment data, divestitures, and a new securitization facility - On April 30, 2024, the company completed the sale of its industrial motors and generators businesses for a purchase price of **$444.0 million**, recognizing a gain of **$17.2 million** in Q2 2024[40](index=40&type=chunk) - On June 30, 2025, the company entered into a new **$400 million** accounts receivable securitization facility and received initial proceeds of **$368.5 million**[63](index=63&type=chunk)[65](index=65&type=chunk) - The company prepaid **$420.0 million** of principal on its Term Facility on June 30, 2025, using proceeds from the new securitization facility[72](index=72&type=chunk) [Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202%20%E2%80%94%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes a 3.3% Q2 sales decline, segment performance, cash flow, and updated 2025 EPS guidance [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Q2 2025 net sales fell 3.3% due to divestitures and organic declines in the IPS and AMC segments Q2 2025 vs Q2 2024 Net Sales by Segment (in Millions) | Segment | Q2 2025 Sales | Q2 2024 Sales | % Change | | :--- | :--- | :--- | :--- | | Automation & Motion Control | $411.1 | $422.2 | (2.6)% | | Industrial Powertrain Solutions | $649.8 | $675.5 | (3.8)% | | Power Efficiency Solutions | $435.2 | $410.9 | 5.9% | | **Consolidated** | **$1,496.1** | **$1,547.6** | **(3.3)%** | - The decrease in consolidated net sales was driven by a negative impact from divestitures (**2.7%**) and an organic sales decline (**1.2%**), partially offset by positive foreign currency translation (**0.6%**)[133](index=133&type=chunk) [2025 Outlook](index=35&type=section&id=2025%20Outlook) The company updated its full-year 2025 GAAP diluted EPS guidance to a range of $4.50 to $5.10 - Updated 2025 GAAP diluted EPS guidance is now **$4.50 to $5.10**[130](index=130&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Strong H1 2025 operating cash flow of $625.5 million supported significant debt repayments - Operating cash flow for H1 2025 was **$625.5 million**, a **$384.1 million increase** from H1 2024, primarily driven by cash from the new Securitization Facility[148](index=148&type=chunk) - The company made net debt repayments of **$633.9 million** during the first six months of 2025[152](index=152&type=chunk) - Anticipated capital spending for property, plant and equipment in 2025 is approximately **$120 million**[151](index=151&type=chunk) [Item 3 — Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company uses derivative instruments to hedge interest rate, foreign currency, and commodity price risks - The company manages market risk from interest rates, foreign currency, and commodity prices using derivative instruments for non-speculative hedging[165](index=165&type=chunk) - As of June 30, 2025, the company had **$73.0 million** of variable rate debt; a hypothetical 10% change in the borrowing rate would change after-tax annualized earnings by **$0.3 million**[167](index=167&type=chunk)[168](index=168&type=chunk) - The company holds foreign currency forward contracts with notional values including **$776.0 million** for the Euro and **$296.8 million** for the Mexican Peso to hedge currency risk[172](index=172&type=chunk) [Item 4 — Controls and Procedures](index=46&type=section&id=Item%204%20%E2%80%94%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - Management, including the CEO and CFO, concluded that disclosure controls and procedures were **effective** as of the end of the period[178](index=178&type=chunk) - **No material changes** were made to the company's internal control over financial reporting during the quarter[179](index=179&type=chunk) [PART II — OTHER INFORMATION](index=46&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1 — Legal Proceedings](index=46&type=section&id=Item%201%20%E2%80%94%20Legal%20Proceedings) There were no material changes in legal proceedings since the 2024 Annual Report on Form 10-K - There have been **no material changes** in legal proceedings since the company's 2024 Annual Report on Form 10-K[181](index=181&type=chunk) [Item 1A — Risk Factors](index=46&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors) Key risks include adverse changes in US trade policy, tariffs, and geopolitical instability in manufacturing regions - Changes to US trade policy, tariffs, and import/export regulations, especially concerning China, Canada, and Mexico, pose a **significant risk** to the company's business and operating results[183](index=183&type=chunk) - The company's significant manufacturing presence outside the US (**96 principal facilities**) exposes it to risks from political, societal, or economic instability and geopolitical conflicts[187](index=187&type=chunk)[189](index=189&type=chunk) [Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares in Q2 2025, with $145.0 million remaining under its buyback program - **No shares** of common stock were repurchased during the quarter ended June 30, 2025[191](index=191&type=chunk) - The maximum value of shares remaining available for purchase under the company's share repurchase program is **$145.0 million** as of June 30, 2025[191](index=191&type=chunk) [Item 5 — Other Information](index=49&type=section&id=Item%205%20%E2%80%94%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - **No director or officer** adopted or terminated a Rule 10b5-1 trading plan during the quarter[192](index=192&type=chunk) [Item 6 — Exhibits](index=50&type=section&id=Item%206%20%E2%80%94%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required CEO and CFO certifications - The filing includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act[194](index=194&type=chunk)

Financial Data and Key Metrics Changes - Sales in the second quarter were down 1.2% on an organic basis compared to the prior year, which was in line with expectations [7] - Adjusted earnings per share for the quarter was $2.48, an increase of 8.3% year-over-year [12] - Adjusted EBITDA margin was 22%, down 20 basis points from the prior year [12] - Free cash flow generated in the second quarter was $493 million, with $368.5 million related to an accounts receivable securitization program [12][26] Business Line Data and Key Metrics Changes - **Automation and Motion Control (AMC)**: Sales down 3.4% year-over-year, primarily due to weakness in the medical end market and project timing [17] - **Industrial Powertrain Solutions (IPS)**: Sales down 4.4% year-over-year, reflecting project timing impacts in Metals and Mining [20] - **Power Efficiency Solutions (PES)**: Sales up 6.5% year-over-year, driven by strong growth in residential and commercial HVAC [23] Market Data and Key Metrics Changes - Orders in AMC were down 7.5% year-over-year, impacted by destocking in the medical market and timing of a large data center order [19] - IPS orders on a daily basis were up 3% in the second quarter, with a backlog increase of 15% year-to-date [22] - Daily organic orders for Regal Rexnord in July were up 4.4%, primarily driven by strength in data centers [11] Company Strategy and Development Direction - The company is on track to deliver at least $250 million of cross-sell synergies from the Rexnord and Ultra transactions [13] - Focus on selling a richer mix of subsystem solutions and new product launches to drive growth [34] - The company aims to neutralize tariff impacts on adjusted EBITDA and earnings by mid-2026 [30] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about sales growth in the low single digits for 2025, supported by a growing backlog [9] - The company expects to see a recovery in the medical market and improved conditions in the industrial sector by 2026 [38][111] - Management noted that while there are macro uncertainties, they have not seen significant demand deterioration due to tariffs [31] Other Important Information - The accounts receivable securitization program completed in the second quarter allows for accelerated debt repayment and is expected to provide $4 million in annualized interest savings [26][27] - The gross annual unmitigated cost impact from tariffs has decreased from $130 million to approximately $125 million [30] Q&A Session Summary Question: Expectations for end market recovery in the back half of the year - Management expects orders to be up mid-single digits in the second half, driven by strong markets like energy, aerospace, and data centers [39] Question: Exposure to rare earth magnets and data center wins - Rare earth magnets represent about 1% of sales, with challenges in procurement expected to be resolved in the second half [41] - Data center wins are expected to continue, with a strong funnel of opportunities [42] Question: AMC division margin ramp and rare earth recovery - AMC's margin guidance has been widened, reflecting backlog visibility and expected recovery in rare earth supply [98] Question: Competitive position in data centers - The company is well-positioned in the data center market, focusing on customized solutions rather than standard offerings [89] Question: Impact of rare earth issues on revenue and profit - The rare earth impact in Q2 was approximately $10 million in sales and $6 million in profit, with expectations to recover in the second half [62][64]

Financial Data and Key Metrics Changes - Sales in Q2 2025 were down 1.2% on an organic basis compared to the prior year, aligning with expectations [6][11] - Adjusted earnings per share increased by 8.3% to $2.48 [11] - Adjusted EBITDA margin was 22%, down 20 basis points year-over-year [11] - Free cash flow generated in Q2 was $493 million, with $368.5 million related to an accounts receivable securitization program [11][25] Business Line Data and Key Metrics Changes - **Automation and Motion Control (AMC)**: Sales decreased by 3.4% year-over-year, primarily due to weakness in the medical end market and project timing [16][18] - **Industrial Powertrain Solutions (IPS)**: Sales were down 4.4% year-over-year, attributed to project timing impacts in Metals and Mining [20][21] - **Power Efficiency Solutions (PES)**: Sales increased by 6.5% year-over-year, driven by strong growth in residential and commercial HVAC [23] Market Data and Key Metrics Changes - Orders in AMC declined by 7.5% year-over-year, impacted by a large data center order that slipped into July [19] - IPS orders increased by 3% on a daily basis, with a book-to-bill ratio of 1.01 [22] - PES orders were down 5.4% on a daily basis, consistent with expectations due to anticipated headwinds in residential HVAC [24] Company Strategy and Development Direction - The company is on track to deliver at least $250 million in cross-sell synergies from recent acquisitions, with a growing funnel of opportunities [12][14] - Focus on longer cycle projects and engineered solutions is expected to drive growth in IPS and AMC segments [20][22] - The company aims to neutralize tariff impacts on adjusted EBITDA and maintain margin neutrality by mid-2026 [27][30] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about low single-digit sales growth in 2025, supported by a growing backlog and positive order trends [8][33] - The company anticipates a recovery in the medical market and improved conditions in the data center sector [36][71] - Management acknowledges ongoing macroeconomic uncertainties but believes underlying business momentum is positive [33][36] Other Important Information - The accounts receivable securitization program completed in Q2 is expected to provide $4 million in annualized interest savings [25][26] - The gross annual unmitigated cost impact from tariffs is estimated to have decreased from $130 million to approximately $125 million [29][30] Q&A Session Summary Question: Expectations for end market recovery in the second half of the year - Management expects orders to be up mid-single digits in the second half, driven by strong performance in data centers and other solid markets [36][37] Question: Exposure to rare earth magnets and data center wins - Rare earth magnets represent about 1% of sales, but challenges in procurement impacted Q2 performance; however, recovery is expected in Q3 and Q4 [39][40] Question: AMC division margin ramp and backlog visibility - AMC's margin guidance has been widened due to rare earth exposure, with expectations for improved conditions in the medical market and higher shippable backlog [92][93] Question: Competitive position in the data center market - The company is well-positioned in the data center market, focusing on customized solutions, and has a strong order funnel [85][86]

Q2 2025 Performance - Net sales decreased by 1.2% organically, aligning with expectations, with large project timing headwinds in Metals & Mining and temporary rare earth magnet availability issues, offset by strength in Residential & Commercial HVAC and Aerospace[10] - Daily orders were down 2.5% year-over-year, but flat when factoring in a $35 million data center order in AMC received early in July[10] - Adjusted gross margin was 38.2%, impacted by temporary rare earth magnet availability[10] - Adjusted EBITDA margin was 22.0%, including $17 million in synergies[10] - Adjusted EPS increased by 8.3% to $2.48[10] - Adjusted free cash flow was $493 million, with $469.8 million used to pay down gross debt and $368.5 million contributed by a new receivables securitization program[10] Segment Performance - Automation & Motion Control (AMC) net sales decreased by 2.6%, with organic sales down 3.4%, driven by Medical, Data Center project timing, and rare earth magnet availability, partially offset by Aerospace[21] - Industrial Powertrain Solutions (IPS) net sales decreased by 3.8%, with organic sales down 4.4%, primarily due to Metals & Mining[25] - Power and Efficiency Solutions (PES) net sales increased by 5.9%, with organic sales up 6.5%, driven by R-HVAC and C-HVAC[29] Debt and Leverage - The company closed on a $400 million accounts receivable securitization facility maturing in 2026, with initial proceeds of $368.5 million used to repay bank debt[31] - The securitization facility is expected to provide ~$4 million in net annualized interest savings and improve debt to equity and leverage ratios[31] - Net debt at the end of Q2 2025 was $4.5347 billion[46] - Leverage ratio (Net Debt to Adjusted EBITDA including synergies) decreased to 3.34[30] 2025 Guidance - Sales guidance is rising to ~$5.95 billion due to FX and tariff pricing impacts[32] - Organic growth is expected to be approximately flat to low single digits[32] - Adjusted EBITDA margin guidance is down ~50bps to ~22.5% due to larger FX headwinds, tariffs, and lower AMC margins (rare earth magnet costs, latest mix impacts)[34] - Adjusted EPS guidance is reaffirmed at ~$10.00, with a narrowed range of $9.70-$10.30[32]

```markdown [Executive Summary & Business Outlook](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Business%20Outlook) Regal Rexnord reported strong Q2 2025 financial results, exceeding expectations, with robust segment performance, significant debt reduction, and narrowed full-year guidance [Second Quarter 2025 Highlights](index=1&type=section&id=1.1.%20Second%20Quarter%202025%20Highlights) Regal Rexnord Corporation reported strong second-quarter 2025 financial results, with adjusted diluted EPS up 8.3% year-over-year and GAAP net income increasing significantly. The company also generated substantial cash from operating activities and reduced gross debt | Metric | Q2 2025 Value ($M) | YoY Change | Source | | :-------------------------------- | :------------ | :--------- | :----- | | Diluted EPS | $1.19 | - | [3] | | Adjusted Diluted EPS* | $2.48 | Up 8.3% | [3] | | Daily Orders | - | Down 2.5% | [3] | | Sales | $1,496.1 | Down 3.3% | [3] | | Organic Sales* | - | Down 1.2% | [3] | | Gross Margin | 37.7% | - | [3] | | Adjusted Gross Margin* | 38.2% | Up 10.0 Basis Points | [3] | | GAAP Net Income | $79.6 | Up from $63.0 | [3] | | Adjusted EBITDA* | $329.7 | Down from $335.3 | [3] | | Adjusted EBITDA Margin* | 22.0% | - | [3] | | Cash From Operating Activities | $523.2 | - | [3] | | Adjusted Free Cash Flow* | $493 | - | [3] | | Gross Debt Paid Down | $469.8 | - | [3] | | Net Debt/Adjusted EBITDA (Including Synergies)* | ~3.3x | - | [3] | - Awarded a **$35 million** data center order in early July, with sales expected to start by year-end, positioning the company for **significant additional content** with this customer over the next 12 months[3](index=3&type=chunk) [CEO Commentary](index=1&type=section&id=1.2.%20CEO%20Commentary) CEO Louis Pinkham highlighted strong Q2 performance, exceeding sales and earnings expectations. He noted robust organic growth in the PES segment and adjusted EBITDA margin expansion in both PES and IPS, despite market headwinds. The company is focused on accelerating growth through cross-sell synergies and new product vitality, with significant cross-sell opportunities identified - PES segment achieved **6.5% organic growth** and a **point of adjusted EBITDA margin expansion**, driven by strong R-HVAC and C-HVAC markets[2](index=2&type=chunk) - IPS segment delivered **over a point of adjusted EBITDA margin expansion** despite persistent end market headwinds[2](index=2&type=chunk) - AMC segment met sales goals but experienced temporary, mix-related margin pressure due to rare earth magnet availability, expected to improve in the back half of the year[2](index=2&type=chunk) - Strong orders in IPS and AMC indicate gaining momentum from end market recovery and outgrowth initiatives[2](index=2&type=chunk) - Ended Q2 with a **$300 million cross-sell opportunity funnel**, on track to realize **$170 million in cross-sell synergies this year** and **$250 million by 2027**[2](index=2&type=chunk) [FY 2025 Guidance](index=1&type=section&id=1.3.%20FY%202025%20Guidance) Regal Rexnord narrowed its full-year 2025 guidance for Adjusted Diluted Earnings per Share and confirmed expectations for Adjusted Free Cash Flow, with mitigation actions in place to offset tariff impacts | Metric | Previous Guidance | New Guidance Range | Source | | :-------------------------------- | :---------------- | :----------------- | :----- | | Adjusted Diluted EPS | - | $9.70 - $10.30 | [3, 5] | | GAAP Diluted EPS | - | $4.50 - $5.10 | [5] | | Adjusted Free Cash Flow (excluding securitization) ($M) | - | $700 | [3] | | Adjusted Free Cash Flow (inclusive of securitization) ($B) | - | Over $1.0 | [3] | - Mitigation actions are on track to neutralize the impact of current tariffs on **2025 Adjusted EBITDA** and **Adjusted EPS**[3](index=3&type=chunk)[5](index=5&type=chunk) [Financial Statements](index=5&type=section&id=2.%20Financial%20Statements) The company's Q2 2025 financial statements show decreased net sales but increased net income, a slight asset reduction, and significantly improved operating cash flow due to securitization [Condensed Consolidated Statements of Income](index=5&type=section&id=2.1.%20Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended June 30, 2025, Regal Rexnord reported a decrease in net sales but an increase in net income attributable to the corporation, driven by lower interest expense and a higher income before taxes compared to the prior year | Metric | Three Months Ended Jun 30, 2025 ($M) | Three Months Ended Jun 30, 2024 ($M) | Six Months Ended Jun 30, 2025 ($M) | Six Months Ended Jun 30, 2024 ($M) | | :--------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Sales | $1,496.1 | $1,547.6 | $2,914.2 | $3,095.3 | | Gross Profit | $564.7 | $571.0 | $1,092.3 | $1,124.1 | | Income from Operations | $182.3 | $193.9 | $342.0 | $327.8 | | Net Income | $79.6 | $63.0 | $137.1 | $83.4 | | Net Income Attributable to Regal Rexnord Corporation | $79.2 | $62.5 | $136.5 | $82.3 | | Diluted EPS | $1.19 | $0.94 | $2.05 | $1.23 | | Cash Dividends Declared Per Share | $0.35 | $0.35 | $0.70 | $0.70 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=2.2.%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets slightly decreased compared to December 31, 2024, primarily due to a reduction in cash and trade receivables, while total equity increased | Metric | Jun 30, 2025 ($M) | Dec 31, 2024 ($M) | | :--------------------------------------- | :----------- | :----------- | | Cash and Cash Equivalents | $320.1 | $393.5 | | Trade Receivables, Net | $549.9 | $842.8 | | Inventories | $1,348.3 | $1,227.5 | | Total Current Assets | $2,518.8 | $2,751.3 | | Total Assets | $13,902.7 | $14,033.7 | | Total Current Liabilities | $1,260.1 | $1,215.7 | | Long-Term Debt | $4,849.6 | $5,452.7 | | Total Liabilities and Equity | $13,902.7 | $14,033.7 | | Total Regal Rexnord Corporation Shareholders' Equity | $6,699.6 | $6,259.8 | [Condensed Consolidated Statements of Cash Flow](index=7&type=section&id=2.3.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) Operating cash flows significantly increased for the three and six months ended June 30, 2025, largely due to a new accounts receivable securitization facility. This strong operating cash generation was used to repay debt | Metric | Three Months Ended Jun 30, 2025 ($M) | Three Months Ended Jun 30, 2024 ($M) | Six Months Ended Jun 30, 2025 ($M) | Six Months Ended Jun 30, 2024 ($M) | | :--------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Cash Provided by Operating Activities | $523.2 | $158.3 | $625.5 | $241.4 | | Net Cash (Used in) Provided by Investing Activities | $(25.7) | $342.7 | $(29.2) | $325.2 | | Net Cash Used in Financing Activities | $(493.7) | $(504.5) | $(686.2) | $(672.5) | | Net Decrease in Cash and Cash Equivalents | $14.8 | $(12.0) | $(73.4) | $(124.9) | | Cash and Cash Equivalents at End of Period | $320.1 | $510.4 | $320.1 | $510.4 | - The **$400 million** accounts receivable securitization facility contributed **$368.5 million of net proceeds** to operating cash flows in Q2 2025, used to repay outstanding bank loans[4](index=4&type=chunk) [Segment Performance](index=2&type=section&id=3.%20Segment%20Performance) Segment performance in Q2 2025 varied, with PES showing strong growth, while AMC and IPS faced declines due to market headwinds and project timing [Automation & Motion Control](index=2&type=section&id=3.1.%20Automation%20%26%20Motion%20Control) The Automation & Motion Control segment experienced a decrease in net sales and organic sales in Q2 2025, primarily due to headwinds in the medical market, project timing in data centers, and temporary rare earth magnet sourcing issues. Despite this, the segment maintained a solid Adjusted EBITDA margin | Metric | Q2 2025 | Q2 2024 | YoY Change (Q2) | YTD 2025 | YTD 2024 | YoY Change (YTD) | | :----------------------- | :------ | :------ | :-------------- | :------- | :------- | :--------------- | | Net Sales ($M) | $411.1 | $422.2 | -2.6% | $807.4 | $822.4 | -1.8% | | Organic Sales Growth (%) | -3.4% | - | - | -1.5% | - | - | | Adjusted EBITDA ($M) | $80.2 | $94.9 | -15.5% | $166.7 | $184.8 | -9.8% | | Adjusted EBITDA Margin (%) | 19.5% | 22.5% | -3.0 pts | 20.6% | 22.5% | -1.9 pts | | Adjusted Gross Margin (%) | 38.0% | 40.4% | -2.4 pts | 39.0% | 40.3% | -1.3 pts | - Sales decline primarily reflects headwinds in the medical market, project timing in the data center market, and temporary challenges sourcing rare earth magnets, which impacted shipments of certain higher margin products into the defense and medical markets. These issues are expected to be resolved by year-end[9](index=9&type=chunk) - Partially offset by growth in the aerospace market[9](index=9&type=chunk) [Industrial Powertrain Solutions](index=2&type=section&id=3.2.%20Industrial%20Powertrain%20Solutions) The Industrial Powertrain Solutions segment experienced a decrease in net sales and organic sales in Q2 2025, mainly due to large project timing in the metals & mining market. Despite this, the segment achieved adjusted EBITDA margin expansion | Metric | Q2 2025 | Q2 2024 | YoY Change (Q2) | YTD 2025 | YTD 2024 | YoY Change (YTD) | | :----------------------- | :------ | :------ | :-------------- | :------- | :------- | :--------------- | | Net Sales ($M) | $649.8 | $675.5 | -3.8% | $1,262.5 | $1,318.9 | -4.3% | | Organic Sales Growth (%) | -4.4% | - | - | -3.9% | - | - | | Adjusted EBITDA ($M) | $175.1 | $174.4 | +0.4% | $340.0 | $340.7 | -0.2% | | Adjusted EBITDA Margin (%) | 26.9% | 25.8% | +1.1 pts | 26.9% | 25.8% | +1.1 pts | | Adjusted Gross Margin (%) | 43.8% | 40.9% | +2.9 pts | 43.7% | 41.2% | +2.5 pts | - Sales decline primarily reflects large project timing in the metals & mining market[9](index=9&type=chunk) [Power Efficiency Solutions](index=2&type=section&id=3.3.%20Power%20Efficiency%20Solutions) The Power Efficiency Solutions segment demonstrated strong performance in Q2 2025, with increases in net sales and organic sales, primarily driven by growth in the residential and commercial HVAC markets. The segment also achieved adjusted EBITDA margin expansion | Metric | Q2 2025 | Q2 2024 | YoY Change (Q2) | YTD 2025 | YTD 2024 | YoY Change (YTD) | | :----------------------- | :------ | :------ | :-------------- | :------- | :------- | :--------------- | | Net Sales ($M) | $435.2 | $410.9 | +5.9% | $844.3 | $796.2 | +6.0% | | Organic Sales Growth (%) | 6.5% | - | - | 7.3% | - | - | | Adjusted EBITDA ($M) | $74.4 | $66.0 | +12.7% | $132.5 | $117.0 | +13.2% | | Adjusted EBITDA Margin (%) | 17.1% | 16.1% | +1.0 pts | 15.7% | 14.7% | +1.0 pts | | Adjusted Gross Margin (%) | 30.0% | 31.1% | -1.1 pts | 28.8% | 29.5% | -0.7 pts | - Results primarily reflect growth in the residential and commercial HVAC markets[9](index=9&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=4.%20Non-GAAP%20Financial%20Measures) This section explains key non-GAAP financial measures, including adjusted EPS, organic sales, EBITDA, gross margin, debt ratios, free cash flow, and effective tax rate [Non-GAAP Measures Explanation](index=4&type=section&id=4.1.%20Non-GAAP%20Measures%20Explanation) Regal Rexnord uses various non-GAAP financial measures to provide additional insights into its operations and facilitate comparisons across periods and with peers. These measures are not substitutes for GAAP results but are used by management for business evaluation and forecasting - Non-GAAP measures disclosed include **adjusted diluted earnings per share**, **adjusted income from operations**, **adjusted operating margin**, **adjusted net sales**, **adjusted gross margin**, **net debt**, **EBITDA**, **adjusted EBITDA**, **adjusted free cash flow**, and **adjusted effective tax rate**[16](index=16&type=chunk) - Organic sales growth refers to the increase in sales from existing operations, excluding sales from acquired or divested businesses and the impact of foreign currency translation[17](index=17&type=chunk) [Adjusted Diluted Earnings Per Share](index=8&type=section&id=4.2.%20Adjusted%20Diluted%20Earnings%20Per%20Share) Adjusted diluted EPS for Q2 2025 increased to $2.48, up from $2.29 in Q2 2024, after adjusting for items such as intangible amortization, restructuring costs, and transaction-related expenses. The company also narrowed its full-year 2025 adjusted diluted EPS guidance | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | GAAP Diluted Earnings Per Share | $1.19 | $0.94 | $2.05 | $1.23 | | Intangible Amortization | $0.99 | $0.98 | $1.96 | $1.96 | | Restructuring and Related Costs | $0.12 | $0.20 | $0.30 | $0.39 | | Transaction and Integration Related Costs | $0.07 | $0.06 | $0.15 | $0.15 | | Adjusted Diluted Earnings Per Share | $2.48 | $2.29 | $4.63 | $4.29 | | 2025 Adjusted Annual Guidance | Minimum | Maximum | | :--------------------------------------- | :------ | :------ | | GAAP Diluted (Loss) Earnings Per Share | $4.50 | $5.10 | | Adjusted Diluted Earnings Per Share | $9.70 | $10.30 | [Organic Sales Growth](index=9&type=section&id=4.3.%20Organic%20Sales%20Growth) Overall organic sales growth for Regal Rexnord was down 1.2% in Q2 2025 and down 0.2% for the six months ended June 30, 2025. Performance varied by segment, with Power Efficiency Solutions showing strong positive organic growth, while Automation & Motion Control and Industrial Powertrain Solutions experienced declines | Segment | Q2 2025 Organic Sales Growth % | YTD 2025 Organic Sales Growth % | | :--------------------------------------- | :----------------------------- | :---------------------------- | | Automation & Motion Control | (3.4)% | (1.5)% | | Industrial Powertrain Solutions | (4.4)% | (3.9)% | | Power Efficiency Solutions | 6.5% | 7.3% | | Total Regal Rexnord | (1.2)% | (0.2)% | [Adjusted EBITDA](index=10&type=section&id=4.4.%20Adjusted%20EBITDA) Regal Rexnord's Adjusted EBITDA for Q2 2025 was $329.7 million, slightly down from $338.2 million in Q2 2024, with an Adjusted EBITDA Margin of 22.0%. The Industrial Powertrain Solutions and Power Efficiency Solutions segments showed positive Adjusted EBITDA margin expansion | Metric | Three Months Ended Jun 30, 2025 ($M) | Three Months Ended Jun 30, 2024 ($M) | Six Months Ended Jun 30, 2025 ($M) | Six Months Ended Jun 30, 2024 ($M) | | :--------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | GAAP Income from Operations | $182.3 | $193.9 | $342.0 | $327.8 | | Adjusted Income from Operations | $198.1 | $201.3 | $374.3 | $381.7 | | Adjusted EBITDA | $329.7 | $338.2 | $639.2 | $655.6 | | Adjusted EBITDA Margin % | 22.0% | 21.9% | 21.9% | 21.2% | | Segment (Q2 2025) | Adjusted EBITDA ($M) | Adjusted EBITDA Margin % | | :--------------------------------------- | :------------------- | :----------------------- | | Automation & Motion Control | $80.2 | 19.5% | | Industrial Powertrain Solutions | $175.1 | 26.9% | | Power Efficiency Solutions | $74.4 | 17.1% | | Total Regal Rexnord | $329.7 | 22.0% | - Adjusted EBITDA excluding Industrial Systems for Q2 2024 was **$335.3 million**, with a margin of **22.2%**[30](index=30&type=chunk) [Adjusted Gross Margin](index=12&type=section&id=4.5.%20Adjusted%20Gross%20Margin) Regal Rexnord's Adjusted Gross Margin for Q2 2025 was 38.2%, an increase of 0.4 percentage points from Q2 2024. Industrial Powertrain Solutions showed significant margin expansion, while Automation & Motion Control and Power Efficiency Solutions experienced slight declines | Metric | Three Months Ended Jun 30, 2025 ($M) | Three Months Ended Jun 30, 2024 ($M) | Six Months Ended Jun 30, 2025 ($M) | Six Months Ended Jun 30, 2024 ($M) | | :--------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Gross Margin | $564.7 | $571.0 | $1,092.3 | $1,124.1 | | Adjusted Gross Margin | $571.4 | $584.5 | $1,109.2 | $1,149.6 | | Gross Margin % | 37.7% | 36.9% | 37.5% | 36.3% | | Adjusted Gross Margin % | 38.2% | 37.8% | 38.1% | 37.1% | | Segment (Q2 2025) | Adjusted Gross Margin % | | :--------------------------------------- | :---------------------- | | Automation & Motion Control | 38.0% | | Industrial Powertrain Solutions | 43.8% | | Power Efficiency Solutions | 30.0% | | Total Regal Rexnord | 38.2% | [Debt and Interest Coverage Ratios](index=15&type=section&id=4.6.%20Debt%20and%20Interest%20Coverage%20Ratios) Regal Rexnord reported a Net Debt/Adjusted EBITDA ratio of 3.50x and a Gross Debt/Adjusted EBITDA ratio of 3.75x as of June 30, 2025. Including expected synergies, the Net Debt/Adjusted EBITDA ratio improved to 3.34x, demonstrating progress in debt reduction | Metric (Last Twelve Months Ended Jun 30, 2025) | Value ($M) | | :--------------------------------------- | :------ | | Adjusted EBITDA | $1,293.8 | | Total Gross Debt | $4,854.8 | | Net Debt | $4,534.7 | | Gross Debt/Adjusted EBITDA* | 3.75 | | Net Debt/Adjusted EBITDA* | 3.50 | | Interest Coverage Ratio* | 3.72 | | Synergies to be Realized Within 18 Months | $65.0 | | Adjusted EBITDA (including synergies)* | $1,358.8 | | Net Debt/Adjusted EBITDA (including synergies) | 3.34 | | Interest Coverage Ratio (including synergies)* | 3.90 | [Adjusted Free Cash Flow](index=16&type=section&id=4.7.%20Adjusted%20Free%20Cash%20Flow) Adjusted Free Cash Flow significantly increased to $493.0 million in Q2 2025, up from $136.4 million in Q2 2024, largely benefiting from the accounts receivable securitization facility. Year-to-date, Adjusted Free Cash Flow reached $578.5 million | Metric | Three Months Ended Jun 30, 2025 ($M) | Three Months Ended Jun 30, 2024 ($M) | Six Months Ended Jun 30, 2025 ($M) | Six Months Ended Jun 30, 2024 ($M) | | :--------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Cash Provided by Operating Activities | $523.2 | $158.3 | $625.5 | $241.4 | | Adjusted Cash Flows from Operations | $523.2 | $168.8 | $625.5 | $251.9 | | Additions to Property Plant and Equipment | $(30.2) | $(32.4) | $(47.0) | $(50.9) | | Adjusted Free Cash Flow | $493.0 | $136.4 | $578.5 | $201.0 | [Adjusted Effective Tax Rate](index=17&type=section&id=4.8.%20Adjusted%20Effective%20Tax%20Rate) The Adjusted Effective Tax Rate for Q2 2025 was 22.6%, a decrease from 23.5% in Q2 2024, reflecting adjustments for various non-cash and non-recurring items | Metric | Three Months Ended Jun 30, 2025 ($M) | Three Months Ended Jun 30, 2024 ($M) | Six Months Ended Jun 30, 2025 ($M) | Six Months Ended Jun 30, 2024 ($M) | | :--------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Income before Taxes | $101.2 | $96.9 | $174.2 | $128.2 | | Provision for Income Taxes | $21.6 | $33.9 | $37.1 | $44.8 | | Effective Tax Rate | 21.3% | 35.0% | 21.3% | 34.9% | | Adjusted Income before Taxes* | $214.1 | $200.3 | $398.5 | $373.9 | | Adjusted Provision for Income Taxes* | $48.4 | $47.0 | $89.8 | $86.4 | | Adjusted Effective Tax Rate* | 22.6% | 23.5% | 22.5% | 23.1% | [Corporate Information & Disclosures](index=2&type=section&id=5.%20Corporate%20Information%20%26%20Disclosures) This section provides an overview of Regal Rexnord, outlines forward-looking statement risks, details investor relations, and describes the new accounts receivable securitization facility [About Regal Rexnord](index=3&type=section&id=5.1.%20About%20Regal%20Rexnord) Regal Rexnord is a global company with 30,000 associates, providing sustainable solutions for motion power, transmission, and control. The company operates through three segments: Automation & Motion Control, Industrial Powertrain Solutions, and Power Efficiency Solutions, serving diverse end markets with secular demand tailwinds - Regal Rexnord provides sustainable solutions that power, transmit, and control motion through electric motors, air moving subsystems, highly engineered power transmission components, and automation offerings[10](index=10&type=chunk) - Key end markets include discrete automation, food & beverage, aerospace, medical, data center, energy, residential and commercial buildings, general industrial, and metals and mining, benefiting from **secular demand tailwinds**[11](index=11&type=chunk) - Comprised of three operating segments: **Automation & Motion Control**, **Industrial Powertrain Solutions**, and **Power Efficiency Solutions**[12](index=12&type=chunk) [Forward-Looking Statements](index=3&type=section&id=5.2.%20Forward-Looking%20Statements) This section outlines the inherent risks and uncertainties associated with forward-looking statements made by Regal Rexnord, emphasizing that actual results could differ materially due to various factors including market trends, strategic plans, financial results, and external economic and geopolitical conditions - Forward-looking statements are not guarantees of future performance and are subject to numerous assumptions, risks, and uncertainties beyond the company's control[13](index=13&type=chunk) - Important factors that could cause actual results to differ include inability to achieve expected benefits from acquisitions/divestitures, **substantial indebtedness**, dependence on key suppliers, fluctuations in commodity prices, trade policy changes, global manufacturing risks, and economic changes in global markets[13](index=13&type=chunk)[14](index=14&type=chunk) - The company disclaims any obligation to update or revise any forward-looking statement, except as required by law[14](index=14&type=chunk) [Investor Relations & Supplemental Materials](index=2&type=section&id=5.3.%20Investor%20Relations%20%26%20Supplemental%20Materials) Regal Rexnord provides details for its Q2 2025 earnings conference call, including access information for the live audio webcast, presentation, and telephone replay. Supplemental materials are available on the company's investor website, which is also used for disseminating important company information - A conference call to discuss earnings will be held on Wednesday, **August 6, 2025**, at **9:00 AM CT (10:00 AM ET)**[6](index=6&type=chunk) - Live audio and presentation available on Regal Rexnord's Investor website: https://investors.regalrexnord.com[6](index=6&type=chunk) - Webcast and telephone replays will be accessible for **three months** after the earnings call[7](index=7&type=chunk) [Accounts Receivable Securitization Facility](index=2&type=section&id=5.4.%20Accounts%20Receivable%20Securitization%20Facility) On June 30, 2025, Regal Rexnord entered into a new $400 million accounts receivable securitization facility, which generated $368.5 million in net proceeds. These proceeds were primarily used to repay outstanding borrowings under existing bank loans, enhancing the company's liquidity and debt management - Company entered into a **$400 million** accounts receivable securitization facility on **June 30, 2025**[4](index=4&type=chunk) - The facility contributed **$368.5 million of net proceeds** to operating cash flows in the quarter[4](index=4&type=chunk) - Proceeds were used to repay the majority of outstanding borrowings under the Company's existing bank loans[4](index=4&type=chunk) ```