Financial Data and Key Metrics Changes - Third quarter sales increased by approximately 2% year-over-year, with orders up about 10% [12] - Adjusted EPS for the quarter was $2.51, an increase compared to the prior year [16] - Adjusted gross margin for the third quarter was 37.6%, down 80 basis points from the prior year [16] - Free cash flow generated in the third quarter was $174 million, with no variable rate debt at the end of the quarter [16] Business Line Data and Key Metrics Changes - Automation and Motion Control (AMC) sales were down 1% year-over-year, primarily due to project timing and challenges in sourcing rare earth magnets [27] - Industrial Powertrain Solutions (IPS) sales increased by 1.6% year-over-year, driven by strength in energy and metals and mining [30] - Power Efficiency Solutions (PES) sales were up just under 1% year-over-year, with strong growth in pool and commercial HVAC [31] Market Data and Key Metrics Changes - Orders in AMC were up 31.7% year-over-year, with a book-to-bill ratio of 1.23 [29] - IPS orders increased by 2.3% on a daily basis, marking the fifth consecutive quarter of positive orders growth [30] - PES orders were up 1.7% on a daily basis, with a book-to-bill ratio of 1.02 [32] Company Strategy and Development Direction - The company is focusing on expanding its data center business, which is expected to significantly contribute to enterprise sales growth [25] - Investments are being made to enhance manufacturing capacity and support new product offerings like modular electrical pods (ePods) [22] - The company aims to achieve margin neutrality on tariffs by the end of next year and is optimistic about growth in 2026 [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about order strength in the fourth quarter, setting the stage for solid growth in 2026 [14] - The company anticipates challenges from tariffs and rare earth magnet sourcing to persist into early 2026, but expects to see benefits from backlog reduction thereafter [28] - Management highlighted the importance of their strong technology team and disciplined execution in navigating current challenges [12] Other Important Information - The company announced a succession plan for its CEO, with a transition expected to take about four to six months [99] - The board is conducting a comprehensive search for a new leader, focusing on candidates with strong operational and growth leadership skills [105] Q&A Session Summary Question: Can you discuss the sequential changes expected in the fourth quarter? - Management expects residential HVAC to decline in the fourth quarter, while data center orders are anticipated to increase significantly due to backlog timing [51][52] Question: What is the outlook for the data center business? - The data center business is projected to grow significantly, potentially doubling over the next two years, contributing meaningfully to overall growth [60] Question: How will tariffs and rare earth challenges impact margins? - Management expects to achieve margin neutrality by the end of next year, with some margin pressures anticipated in the first half of 2026 [79] Question: What is the expected contribution of the new facility? - The new facility is expected to begin shipping products by mid-2026, with contribution margins anticipated to be accretive to the overall business [107]

Financial Performance - Q3 2025 - Net sales increased to $1483 million in 3Q25 from $1472.8 million in 3Q24 [11] - Adjusted EBITDA increased to $339.4 million in 3Q25 from $337 million in 3Q24, with a margin of 22.7% [11] - Adjusted diluted EPS increased to $2.51 in 3Q25 from $2.49 in 3Q24 [11] - Adjusted free cash flow increased to $174 million in 3Q25 from $125.5 million in 3Q24 [11] Segment Performance - Q3 2025 - Automation & Motion Control: Net sales increased slightly to $402 million, organic sales decreased by 1%, and adjusted EBITDA margin was 20.5% [24, 26] - Industrial Powertrain Solutions: Net sales increased by 2.8% to $662.3 million, organic sales increased by 1.6%, and adjusted EBITDA margin was 26.4% [28, 30] - Power and Efficiency Solutions: Net sales increased slightly to $432.7 million, organic sales increased by 0.8%, and adjusted EBITDA margin was 19% [32, 34] Updated 2025 Guidance - Sales are guided to approximately $5.96 billion [35] - Organic growth is expected to be low single digits [35] - Adjusted EBITDA margin is guided down to approximately 22% [35] - Adjusted EPS is guided to approximately $9.65 [35] - Free cash flow is now expected to be approximately $625 million [36] Tariff and Trade Policy Impacts - The unmitigated annual impact of tariffs is estimated to be approximately $175 million [37]

Financial Performance - Diluted EPS was $1.20, up 10.1% year-over-year; adjusted diluted EPS was $2.51, up 0.8% year-over-year[2] - Sales totaled $1,497 million, reflecting a 1.3% increase year-over-year, and a 0.7% increase on an organic basis[2] - GAAP net income increased to $80 million from $73 million year-over-year[2] - Adjusted EBITDA was $339.4 million, slightly up from $337 million year-over-year[2] - Net income attributable to Regal Rexnord Corporation for Q3 2025 was $79.6 million, up from $72.7 million in Q3 2024, while net income for the nine months ended September 30, 2025, increased to $215.9 million from $155.0 million[17] - Basic earnings per share for Q3 2025 were $1.20, compared to $1.09 in Q3 2024, and for the nine months ended September 30, 2025, it increased to $3.26 from $2.33[17] - Adjusted diluted earnings per share for Q3 2025 were $2.51, compared to $2.49 in Q3 2024, and for the nine months ended September 30, 2025, it increased to $7.14 from $6.78[20] - Net Income for the nine months ended September 30, 2025, increased to $217.0 million, compared to $156.4 million for the same period in 2024, representing a growth of 38.7%[35] Sales and Revenue - Data center orders reached $135 million in Q3, with an additional $60 million secured in October[1] - Automation & Motion Control segment net sales were $402 million, a slight increase of 0.1%[9] - Industrial Powertrain Solutions segment net sales were $662.3 million, up 2.8% year-over-year[9] - Power Efficiency Solutions segment net sales were $432.7 million, an increase of 0.3% year-over-year[9] - Organic sales for the three months ended September 30, 2025, totaled $1,483.0 million, reflecting a growth of 1.3% compared to the same period in 2024[25] - The company reported net sales of $4,411.2 million for the nine months ended September 30, 2025, with a decline of 3.5% year-over-year[26] Expenses and Costs - The company incurred restructuring and related costs of $13.8 million for the three months ended September 30, 2025[27] - The company incurred restructuring and related costs of $39.8 million for the nine months ended September 30, 2025, compared to $53.8 million in 2024, a reduction of 26%[29] - The company incurred transaction and integration-related costs of $19.2 million for the nine months ended September 30, 2025, down from $21.2 million in 2024, a decrease of 9.4%[42] Assets and Liabilities - Total assets as of September 30, 2025, were $13,874.1 million, a decrease from $14,033.7 million as of December 31, 2024[18] - Current liabilities increased to $1,266.4 million as of September 30, 2025, from $1,215.7 million at the end of 2024[18] - Cash and cash equivalents at the end of Q3 2025 were $400.0 million, compared to $460.4 million at the end of Q3 2024[19] - Total Gross Debt as of September 30, 2025, was $4,785.4 million, with a Net Debt of $4,385.4 million after accounting for cash and cash equivalents[38] Future Projections - The company expects mid-single digit organic growth in Q4 and low- to mid-single digit growth in 2026[1][3] - For 2025, the company projects adjusted diluted earnings per share between $9.50 and $9.80, with GAAP diluted earnings per share ranging from $4.26 to $4.56[23] - The company expects to realize synergies of $55.0 million within 18 months, which will positively impact future Adjusted EBITDA[39] Taxation - The effective tax rate increased to 12.9% in Q3 2025 from 10.3% in Q3 2024[42] - Provision for income taxes for the nine months ended September 30, 2025, was $133.2 million, compared to $123.3 million in 2024, indicating an increase of 8.0%[42] - The adjusted effective tax rate for the nine months ended September 30, 2025, was 21.9%, slightly up from 21.4% in 2024[42] Other Financial Metrics - The company paid down $74.5 million of gross debt, achieving a net debt/adjusted EBITDA ratio of approximately 3.2x[2] - Adjusted EBITDA for the nine months ended September 30, 2025, was $978.5 million, slightly down from $992.6 million in 2024, indicating a decrease of 1.4%[29] - Adjusted Free Cash Flow for the nine months ended September 30, 2025, reached $752.5 million, compared to $326.5 million in 2024, indicating a significant increase of 130%[40] - Interest Coverage Ratio, including synergies, is projected at 4.01, indicating strong ability to cover interest expenses[39]

Core Insights - Regal Rexnord Corporation (RRX) is a significant player in the manufacturing sector, particularly in the Zacks Manufacturing - General Industrial industry, known for its diverse product range and solutions [1] Financial Performance - RRX reported an earnings per share (EPS) of $2.51 for Q3 2025, slightly below the estimated $2.56, but showing a small increase from $2.49 EPS in the same quarter last year, resulting in a negative surprise of 1.95% [2][6] - The company's revenue for Q3 2025 reached approximately $1.5 billion, surpassing the Zacks Consensus Estimate of $1.49 billion, marking a 1.3% increase compared to the same period last year and exceeding expectations by 0.28% [3][6] Market Valuation - RRX has a price-to-earnings (P/E) ratio of about 39.88, indicating investor willingness to pay for each dollar of earnings, and a price-to-sales ratio of approximately 1.71, reflecting market value relative to sales [4] - The enterprise value to sales ratio stands at 2.51, while the enterprise value to operating cash flow ratio is around 14.78 [4] Financial Health - RRX's debt-to-equity ratio is approximately 0.75, suggesting a moderate level of debt compared to equity, and the current ratio of about 2.00 indicates the company's capability to cover short-term liabilities with its short-term assets [5]

Core Insights - Regal Rexnord reported revenue of $1.5 billion for the quarter ended September 2025, reflecting a year-over-year increase of 1.3% [1] - The company's EPS was $2.51, slightly up from $2.49 in the same quarter last year, but below the consensus estimate of $2.56, resulting in an EPS surprise of -1.95% [1] - The revenue exceeded the Zacks Consensus Estimate of $1.49 billion, indicating a positive surprise of +0.28% [1] Revenue Performance by Segment - Industrial Powertrain Solutions (IPS) generated revenues of $662.3 million, surpassing the average estimate of $660.13 million, marking a year-over-year increase of +2.8% [4] - Automation & Motion Control (AMC) reported revenues of $402 million, slightly below the estimated $406.08 million, with a minimal year-over-year change of +0.1% [4] - Power Efficiency Solutions (PES) achieved revenues of $432.7 million, exceeding the average estimate of $423.71 million, reflecting a year-over-year increase of +0.3% [4] Adjusted EBITDA Performance - Adjusted EBITDA for Industrial Powertrain Solutions (IPS) was $174.6 million, below the average estimate of $177.76 million [4] - Adjusted EBITDA for Automation & Motion Control (AMC) stood at $82.6 million, also below the average estimate of $86.41 million [4] - Adjusted EBITDA for Power Efficiency Solutions (PES) reached $82.2 million, exceeding the average estimate of $74 million [4] Stock Performance - Regal Rexnord's shares returned +0.9% over the past month, underperforming the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Regal Rexnord reported quarterly earnings of $2.51 per share, missing the Zacks Consensus Estimate of $2.56 per share, but showing a slight increase from $2.49 per share a year ago, indicating a -1.95% earnings surprise [1] Financial Performance - The company posted revenues of $1.5 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.28% and showing an increase from $1.48 billion year-over-year [2] - Over the last four quarters, Regal Rexnord has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Regal Rexnord shares have declined approximately 6.7% since the beginning of the year, contrasting with the S&P 500's gain of 17.2% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.73 on revenues of $1.51 billion, and for the current fiscal year, it is $9.93 on revenues of $5.92 billion [7] - The outlook for Regal Rexnord's stock will depend significantly on management's commentary during the earnings call and any changes in earnings estimate revisions [3][4] Industry Context - The Manufacturing - General Industrial industry, to which Regal Rexnord belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Core Insights - Regal Rexnord Corporation is undergoing a CEO search process as part of its succession planning, with current CEO Louis Pinkham having significantly contributed to the company's transformation and growth since April 2019 [1][2] - Under Mr. Pinkham's leadership, the company's enterprise value increased from approximately $4.5 billion to $15 billion, achieving a total shareholder return of nearly 100% [1] - The Board of Directors expresses confidence in the company's positioning for future growth, attributing this to the enhanced customer value proposition developed during Mr. Pinkham's tenure [2] Company Overview - Regal Rexnord employs around 30,000 associates globally, focusing on sustainable solutions for power, transmission, and motion control [3] - The company offers a range of products including electric motors, power transmission components, and automation solutions for various applications [3] - Regal Rexnord operates in multiple end markets such as discrete automation, food & beverage, aerospace, medical, data centers, energy, and general industrial sectors [4] Business Segments - The company is structured into three operating segments: Automation & Motion Control, Industrial Powertrain Solutions, and Power Efficiency Solutions [4] - Regal Rexnord is headquartered in Milwaukee, Wisconsin, with manufacturing, sales, and service facilities worldwide [4]

Core Insights - Regal Rexnord Corporation reported strong momentum in the third quarter of 2025, with significant orders in the data center segment totaling $135 million, plus an additional $60 million in October [2] - The company is focusing on growth investments in the data center market, which are yielding positive results and positioning Regal Rexnord as an emerging scale player with a bid pipeline exceeding $1 billion [2] - The company has narrowed its annual guidance for GAAP diluted earnings per share to a range of $4.26 to $4.56, primarily due to unfavorable impacts from tariffs and trade policies related to rare earth magnets [3] Financial Performance - Regal Rexnord achieved diluted EPS of $1.20, up 10.1% year-over-year, and adjusted diluted EPS of $2.51, up 0.8% year-over-year [9] - Total sales for the quarter were $1,497 million, reflecting a 1.3% increase compared to the previous year, with organic sales growth of 0.7% [9] - The company reported GAAP net income of $80 million, an increase of $7 million from the previous year, and adjusted EBITDA of $339.4 million, up $2.4 million year-over-year [9] Segment Performance - Automation & Motion Control net sales were $402 million, a slight increase of 0.1%, with a decrease of 1.0% on an organic basis, primarily due to project timing and challenges in the medical market [10] - Industrial Powertrain Solutions net sales reached $662.3 million, an increase of 2.8%, with a 1.6% organic growth driven by strength in energy and metals & mining [10] - Power Efficiency Solutions net sales were $432.7 million, up 0.3%, with organic growth of 0.8%, reflecting growth in pool and commercial HVAC markets [10] Strategic Initiatives - The company is investing in a new 100,000 square foot assembly facility in Texas to support the growing demand in the data center market [9] - Regal Rexnord is diversifying its growth strategy by expanding into new secular markets, as evidenced by recent wins in air filtration solutions for semiconductor clean rooms [2] - The company aims to achieve a net leverage ratio of approximately 3x by the end of 2025, having paid down $74.5 million of gross debt during the quarter [2][9]

Core Insights - The article discusses the author's investment philosophy, which incorporates various strategies including fundamental, technical, and momentum investing, highlighting the benefits of each approach [1]. Investment Approach - The author emphasizes a diversified investment strategy that leverages fundamental analysis, technical analysis, and momentum investing to enhance decision-making [1]. Purpose of Writing - The article serves as a platform for tracking the performance of the author's investment ideas and aims to connect with other investors who share similar interests [1].

Core Viewpoint - CVS Group plans to move its listing from the Alternative Investment Market to the London Stock Exchange's Main Market, indicating a strategic shift to enhance its visibility and access to capital [1] Group 1: Company Actions - The company has approved a new 20 million pound share buyback program, reflecting confidence in its financial position and commitment to returning value to shareholders [1]