Core Insights - Regal Rexnord Corporation will present at the Baird Global Industrial Conference on November 12, 2025, from 12:00 to 12:30 PM CT [1] - A live webcast of the presentation will be available on the Regal Rexnord investor website, with an archive accessible for 90 days post-event [2] Company Overview - Regal Rexnord employs 30,000 associates globally, focusing on sustainable solutions that power, transmit, and control motion [3] - The company offers electric motors, air moving subsystems, and a range of power transmission components for industrial applications [3] - Regal Rexnord's automation products include controllers, drives, precision motors, and actuators for various applications, including factory automation and surgical tools [3] Market Segments - The company operates in several end markets, benefiting from strong secular demand, including discrete automation, food & beverage, aerospace, medical, data centers, energy, residential and commercial buildings, general industrial, and metals and mining [4] Operating Segments - Regal Rexnord is structured into three operating segments: Automation & Motion Control, Industrial Powertrain Solutions, and Power Efficiency Solutions [5] - The company is headquartered in Milwaukee, Wisconsin, with manufacturing, sales, and service facilities worldwide [5] Financial Performance - Regal Rexnord reported strong financial results for the third quarter of 2025, with a diluted EPS of $1.20, reflecting a 10.1% increase compared to the previous year [6] - The adjusted diluted EPS was $2.51, showing a 0.8% increase year-over-year [6]

Core Insights - The company is initiating a leadership transition plan to appoint a new CEO while maintaining business continuity and focusing on profitable growth initiatives [1][3][71] Financial Performance - The company reported a solid third-quarter performance with sales up approximately 2% and orders up about 10%, indicating strong top-line momentum [2][10] - Adjusted earnings per share for the quarter was $2.51, an increase compared to the prior year [9][10] - Free cash flow generated in the third quarter was $174 million, primarily used to pay down debt, with expectations to generate $625 million for the year [10][30][66] Market and Segment Analysis - The data center market is a significant growth area, with $135 million in orders booked in the quarter and an additional $60 million in October, reflecting strong traction [7][11] - The company’s data center business is projected to grow from $30 million five years ago to an estimated $130 million this year, with a bid pipeline approaching $1 billion [11][12][62] - Orders in the automation and motion control (AMC) segment were up 31.7% year-over-year, driven by large data center orders [24][21] Margin and Cost Dynamics - The adjusted gross margin for the third quarter was 37.6%, down 80 basis points from the prior year, impacted by tariffs and rare earth magnet availability [8][10] - Adjusted EBITDA margin was 22.7%, reflecting synergy benefits offset by mix tariffs and rare earth pressures [9][10] - The company expects to achieve margin neutrality on tariffs by the end of next year, with ongoing efforts to manage tariff impacts [30][59] Future Outlook - The company anticipates low to mid-single-digit organic sales growth in 2026, with data centers contributing significantly to this growth [38][50] - Expectations for free cash flow in 2026 are nearly $900 million, supporting further debt reduction and improving leverage ratios [39][66] - The company is investing in expanding capacity in its data center business, with new facilities in British Columbia and Texas expected to enhance production capabilities [18][19][78] Leadership Transition - The board has initiated a comprehensive search for a new CEO, expected to take about four to six months, ensuring a smooth transition and continuity in strategy [71][72]

Financial Performance - Net sales for Q3 2025 reached $1,497.0 million, a slight increase from $1,477.4 million in Q3 2024, while net sales for the nine months ended September 30, 2025, were $4,411.2 million, down from $4,572.7 million in the same period last year[12]. - Gross profit for Q3 2025 was $554.2 million, compared to $556.3 million in Q3 2024, and for the nine months ended September 30, 2025, gross profit was $1,646.5 million, down from $1,680.4 million[12]. - Net income attributable to Regal Rexnord Corporation for Q3 2025 was $79.6 million, an increase from $72.7 million in Q3 2024, while net income for the nine months ended September 30, 2025, was $215.9 million, compared to $155.0 million in the prior year[12]. - Earnings per share (EPS) for Q3 2025 was $1.20, up from $1.09 in Q3 2024, and for the nine months ended September 30, 2025, EPS was $3.26, compared to $2.33 in the same period last year[12]. - Comprehensive income for Q3 2025 was $79.2 million, compared to $184.0 million in Q3 2024, while comprehensive income for the nine months ended September 30, 2025, was $552.6 million, up from $232.4 million in the prior year[14]. - Net income for the nine months ended September 30, 2025, was $217.0 million, an increase from $156.4 million for the same period in 2024, representing a growth of 38.7%[24]. - Cash provided by operating activities for the nine months ended September 30, 2025, was $823.0 million, compared to $396.2 million for the same period in 2024, indicating a significant increase of 107.3%[24]. Assets and Liabilities - Total assets as of September 30, 2025, were $13,874.1 million, a decrease from $14,033.7 million at the end of 2024[15]. - Current liabilities increased to $1,266.4 million as of September 30, 2025, compared to $1,215.7 million at the end of 2024[15]. - Long-term debt decreased to $4,780.0 million as of September 30, 2025, down from $5,452.7 million at the end of 2024[15]. - Regal Rexnord Corporation's shareholders' equity increased to $6,763.5 million as of September 30, 2025, compared to $6,259.8 million at the end of 2024[15]. - Total equity as of September 30, 2025, was $6,772.3 million, up from $6,485.8 million as of September 30, 2024, reflecting a growth of 4.4%[21]. - The company had cash and cash equivalents of $400.0 million at the end of September 30, 2025, down from $460.4 million at the end of September 30, 2024[24]. Revenue Breakdown - North America contributed $1,057.8 million to total revenue in Q3 2025, accounting for approximately 70.7% of total revenue, while Asia, Europe, and Rest-of-World contributed $108.2 million, $251.8 million, and $79.2 million, respectively[31]. - For the nine months ended September 30, 2025, total revenue reached $4,411.2 million, compared to $4,572.7 million for the same period in 2024, indicating a decline of 3.5%[32]. - The company reported depreciation of $117.5 million for the nine months ended September 30, 2025, slightly down from $122.6 million for the same period in 2024[24]. Costs and Expenses - The company’s gross profit is influenced by net sales and cost of sales, with raw materials being a significant component of costs[120]. - The company’s operating expenses primarily consist of general and administrative expenses, sales and marketing expenses, and research and development expenses[122]. - Interest expense for the nine months ended September 30, 2025, was $262.5 million, compared to $98.0 million in the same period of 2024, showing a substantial increase[54]. - The company incurred restructuring costs totaling $8.8 million for the three months ended September 30, 2025, compared to $12.9 million for the same period in 2024, indicating a 31.8% decrease[109]. Tax and Compliance - The effective tax rate for the three months ended September 30, 2025 was 12.9%, up from 10.3% in the same period of 2024[84]. - The effective tax rate for the nine months ended September 30, 2025 was 18.4%, down from 25.4% for the same period in 2024, due to tax benefits associated with divestitures and rate reductions[142]. - The Company had approximately $4.4 million of unrecognized tax benefits as of September 30, 2025, which would impact the effective income tax rate if recognized[85]. Shareholder Actions - The maximum value of shares remaining available for repurchase as of September 30, 2025, is $145.0 million, with no repurchases made during the current quarter[190]. - The Board of Directors approved a share repurchase program of up to $500.0 million, which has no expiration date[190]. Market and Economic Conditions - The company expects to incur increased costs due to tariffs imposed by the US government and retaliatory tariffs from other countries, which may lead to delays or disruptions in product deliveries[187]. - Ongoing geopolitical conflicts, such as those between Russia and Ukraine, have negatively impacted the global economy, although the company has not yet seen material effects on its operating results[188]. - The company is subject to risks associated with changes in US and foreign legislation and regulations relating to imports, which could adversely affect its operations and financial results[185].

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]