Company Overview - Regal Rexnord Corporation has 30,000 associates globally, providing sustainable solutions that power, transmit, and control motion [4] - The company offers electric motors and air moving subsystems that create motion, along with a portfolio of engineered power transmission components for industrial applications [4] - Regal Rexnord operates in three segments: Industrial Powertrain Solutions, Power Efficiency Solutions, and Automation & Motion Control [6] Market Demand - The company's end markets experience significant secular demand tailwinds, including sectors such as discrete automation, food & beverage, aerospace, medical, data center, energy, residential and commercial buildings, general industrial, and metals and mining [5] Financial Reporting - Regal Rexnord plans to release its second quarter 2025 financial results after market close on August 5, 2025 [1] - A conference call to discuss the earnings will be held on August 6, 2025, at 9:00 am CT (10:00 am ET) [2] - Webcast and telephone replay options will be available for three months following the earnings call [3]

Financial Performance - Net sales for the three months ended March 31, 2025, were $1,418.1 million, a decrease of 8.3% compared to $1,547.7 million for the same period in 2024[12]. - Gross profit for the same period was $527.6 million, down from $553.1 million, reflecting a gross margin of 37.2%[12]. - Net income attributable to Regal Rexnord Corporation increased to $57.3 million, compared to $19.8 million in the prior year, representing a growth of 189.4%[12]. - Earnings per share attributable to Regal Rexnord Corporation were $0.86, significantly higher than $0.30 for the same quarter last year[12]. - Comprehensive income for the three months ended March 31, 2025, was $181.9 million, compared to a loss of $67.5 million in the prior year[14]. - Net income for the three months ended March 31, 2025, was $57.5 million, compared to $20.4 million for the same period in 2024, representing an increase of 181.8%[21]. - The company reported a consolidated income from operations of $159.7 million for Q1 2025, an increase from $133.9 million in Q1 2024[114]. Assets and Liabilities - Total assets as of March 31, 2025, were $14,032.3 million, slightly down from $14,033.7 million at the end of 2024[16]. - Current liabilities increased to $1,218.4 million from $1,215.7 million, with accounts payable rising to $589.3 million[16]. - Long-term debt decreased to $5,291.8 million from $5,452.7 million, indicating a reduction in leverage[16]. - Cash and cash equivalents were $305.3 million, down from $393.5 million at the end of 2024[16]. - Total debt as of March 31, 2025, was $5,296.9 million, a decrease from $5,457.7 million as of December 31, 2024[54]. - As of March 31, 2025, total current assets were $1,165.6 million, an increase from $1,132.2 million as of December 31, 2024[139]. Cash Flow and Capital Expenditures - Net cash provided by operating activities increased to $102.3 million in Q1 2025 from $83.1 million in Q1 2024, a growth of 23.0%[21]. - Cash flow provided by operating activities increased by $19.2 million to $102.3 million for the three months ended March 31, 2025, compared to $83.1 million in 2024[124]. - Cash flow used in investing activities decreased to $3.5 million for the three months ended March 31, 2025, from $17.5 million in the same period in 2024[125]. - Capital expenditures for the three months ended March 31, 2025, totaled $16.8 million[47]. - The company anticipates capital spending for property, plant, and equipment to be approximately $120 million in 2025[126]. Segment Performance - North America generated $1,002.3 million in revenue for Q1 2025, accounting for 70.6% of total revenue, while Asia contributed $95.0 million, representing 6.7%[29]. - The Automation & Motion Control segment reported net sales of $396.3 million, a decrease of $3.9 million or 1.0% compared to Q1 2024, with a negative foreign currency translation impact of 1.4%[117]. - The Industrial Powertrain Solutions segment had net sales of $612.7 million, a decrease of $30.7 million or 4.8% compared to Q1 2024, with an organic sales decline of 3.4%[118]. - The Power Efficiency Solutions segment achieved net sales of $409.1 million, an increase of $23.8 million or 6.2% compared to Q1 2024, driven by an organic sales increase of 8.0%[119]. Tax and Interest - The effective tax rate for the three months ended March 31, 2025, was 21.2%, a decrease from 34.8% for the same period in 2024, primarily due to a non-deductible loss from the divestiture of the industrial motors and generators businesses[70]. - The average daily balance in borrowings under the Multicurrency Revolving Facility was $81.4 million for the three months ended March 31, 2025, compared to $98.5 million for the same period in 2024[61]. - The company paid $76.9 million in interest during the three months ended March 31, 2025, compared to $94.8 million in the same period of 2024, a reduction of 18.9%[21]. Shareholder Actions - The company declared dividends of $0.35 per share, totaling $23.2 million for the quarter[18]. - The Company authorized a share repurchase program of up to $500.0 million, with $145.0 million remaining available for purchase as of March 31, 2025[167]. - Curtis Stoelting terminated a Rule 10b5-1 trading arrangement on February 14, 2025, which allowed for the potential sale of up to 4,500 shares[168]. - A new Rule 10b5-1 trading arrangement was entered into by Mr. Stoelting for the sale of up to 9,000 shares, effective May 26, 2025[169]. Derivatives and Hedging - The Company has commodity forward contracts to hedge forecasted purchases of commodities, with a notional amount of $56.0 million for copper as of March 31, 2025[84]. - The Company had currency forward contracts with a notional amount of $1,227.5 million for euros as of March 31, 2025[84]. - The fair value of derivative currency contracts as of March 31, 2025, was $18.7 million, compared to $1.0 million on December 31, 2024[92]. - The company recorded an estimated liability for incurred claims related to sub-fractional motors, but cannot assure that these claims will not materially affect its subsidiary's financial condition[74]. - The company is exposed to foreign currency risks from operations, including translation of local currency balances and intercompany loans, and aims to minimize this exposure through foreign currency exchange contracts[146]. Restructuring and Future Outlook - The restructuring costs for the three months ended March 31, 2025, totaled $9.8 million, slightly up from $9.3 million in the same period of 2024[96]. - The company expects to incur approximately $16.8 million in future restructuring charges throughout the remainder of 2025[96]. - The company plans to mitigate the impact of current tariffs on 2025 earnings through various actions[113]. - The company expects to incur increased costs due to tariffs imposed by the US government and retaliatory tariffs from other countries, which may impact financial results[159].

Financial Data and Key Metrics Changes - Sales in the first quarter were up 0.7% year-over-year on an organic basis, or 2.3% on a daily organic basis, with strength in residential HVAC, aerospace, and energy markets [11][12] - Adjusted gross margin was 37.9%, up 50 basis points year-over-year, while adjusted EBITDA margin was 21.8%, up 30 basis points [13][14] - Adjusted earnings per share in the quarter was $2.15, up 7.5% year-over-year, or approximately 10% adjusted for the impact of the Industrial Systems divestiture [14] - Free cash flow generated in the quarter was nearly $86 million, up 32% year-over-year, contributing to a debt reduction of $164 million [14][32] Business Line Data and Key Metrics Changes - Automation and Motion Control (AMC) net sales were up 40 basis points year-over-year on an organic basis, driven by strength in aerospace and defense, and a return to growth in discrete automation [22] - Industrial Powertrain Solutions (IPS) net sales were down 3.4% year-over-year on an organic basis, reflecting weakness in the machinery off-highway market [25] - Power Efficiency Solutions (PES) net sales were up 8% year-over-year on an organic basis, largely due to strong growth in residential HVAC, which was up nearly 30% [28][29] Market Data and Key Metrics Changes - IPS sales in North America were up low single digits, while sales in China, Europe, and the rest of the world experienced weakness [26] - Orders in IPS were up nearly 9% in the first quarter, reflecting further outgrowth in attractive markets [26] - Organic orders in April were down 1.8%, largely due to aerospace project timing in AMC and anticipated order rebalancing in PES [12] Company Strategy and Development Direction - The company is focused on executing growth, synergy, and cash flow acceleration plans, while implementing robust tariff mitigation strategies [10][14] - The humanoid robot market is identified as a significant growth opportunity, with expectations of strong double-digit CAGRs for the next decade [15][19] - The company aims to leverage its automation portfolio to gain market share in the humanoid space, with recent wins worth over $20 million in annual sales [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving growth prospects, noting three quarters of positive orders growth and a belief that most end markets are near trough levels of demand [7][9] - The company reaffirmed its earnings guidance for the year, despite macroeconomic uncertainties and tariff-related challenges [9][33] - Management emphasized confidence in achieving tariff-related cost and margin neutrality by mid-2026 [42][44] Other Important Information - The company ended the quarter with total debt of approximately $5.3 billion and net debt just below $5 billion [32] - The company plans to continue deploying the majority of its free cash flow to debt reduction in 2025 [32] Q&A Session Summary Question: Dynamics of long cycle versus short cycle orders - Management noted good momentum in winning longer cycle projects, especially in IPS, while short cycle orders remained stable [48][50] Question: Competitive positioning and share gains - Management highlighted a net advantageous position due to global manufacturing footprint and dual country sourcing strategies, expecting share opportunities to arise [53][54] Question: EBITDA margin outlook and drivers - Management expects a step-up in EBITDA margins in the second half, driven by mix, volume, and price synergies [58][59] Question: PES revenue outlook and conservatism in guidance - Management expressed caution regarding the second half outlook for PES due to macroeconomic factors, despite strong first quarter performance [63] Question: Mitigation of tariff impacts - Management outlined that supply chain realignments and production relocations are primary mitigation strategies, with pricing actions also contributing [69][70] Question: IPS margin guide and mix effects - Management confirmed that the margin guide for IPS is primarily affected by mix rather than tariff pressures [83] Question: Humanoid market opportunities - Management indicated that the $100 million opportunity funnel is global, with recent wins not primarily based in China [100]

Financial Data and Key Metrics Changes - Sales in Q1 2025 increased by 0.7% year-over-year on an organic basis, or 2.3% on a daily organic basis, with notable strength in residential HVAC, aerospace, and energy markets [10][12] - Adjusted gross margin was 37.9%, up 50 basis points year-over-year, while adjusted EBITDA margin was 21.8%, up 30 basis points [12][13] - Adjusted earnings per share in the quarter was $2.15, reflecting a 7.5% increase year-over-year, or approximately 10% adjusted for the impact of the Industrial Systems divestiture [13] - Free cash flow generated in the quarter was nearly $86 million, up 32% year-over-year, contributing to a $164 million debt repayment [13][33] Business Line Data and Key Metrics Changes - Automation and Motion Control (AMC) net sales were up 40 basis points year-over-year on an organic basis, driven by strength in aerospace and defense, with discrete automation returning to growth [22][23] - Industrial Powertrain Solutions (IPS) net sales decreased by 3.4% year-over-year on an organic basis, reflecting weakness in the machinery off-highway market, but orders were up nearly 9% [25][27] - Power Efficiency Solutions (PES) net sales increased by 8% year-over-year on an organic basis, primarily due to strong growth in residential HVAC, which was up nearly 30% [29][30] Market Data and Key Metrics Changes - IPS sales in North America were up low single digits, while sales in China, Europe, and the rest of the world experienced declines [26] - Orders in IPS were up nearly 9% in Q1, indicating strong performance in metals and mining and marine markets [27] - Organic orders in April were down 1.8%, largely due to aerospace project timing in AMC and anticipated order rebalancing in PES [11] Company Strategy and Development Direction - The company is focused on executing growth, synergy, and cash flow acceleration plans while implementing robust tariff mitigation strategies [8][10] - Regal Rexnord is well-positioned in the humanoid robot market, with expectations for significant growth opportunities in the coming years [14][19] - The company aims to achieve EBITDA margin neutrality by mid-2026 through effective tariff mitigation actions [40][43] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving growth prospects, noting that most end markets are at or near trough levels of demand and starting to rebound [6][7] - The company reaffirmed its 2025 guidance, indicating confidence in its ability to manage through tariff-related uncertainties while maintaining a positive outlook on order momentum [34][45] - Management highlighted the potential for share gains due to tariff-related pricing and strategic opportunities [38][45] Other Important Information - The company ended the quarter with total debt of approximately $5.3 billion and net debt just below $5 billion, with plans to continue deploying free cash flow to debt reduction [33] - The company has a funnel of opportunities worth approximately $100 million in the humanoid robot market, with several recent wins worth over $20 million in annual sales [20][104] Q&A Session Summary Question: Dynamics of long cycle vs short cycle orders - Management noted good momentum in winning longer cycle projects, particularly in IPS, while short cycle orders remained stable [49][50] Question: Competitive positioning and share gains - Management emphasized a net advantageous position due to global manufacturing footprint and dual country sourcing strategies, expecting share opportunities to arise [53][54] Question: EBITDA margin outlook and tariff impacts - Management expects a step-up in EBITDA margins in the second half of the year, primarily driven by mix and volume improvements, with confidence in achieving EBITDA neutrality by year-end [59][60] Question: PES revenue outlook and conservatism in guidance - Management indicated that while pleased with Q1 performance, they remain cautious about the second half due to macroeconomic factors [63] Question: Mitigation of tariff impacts - Management outlined that supply chain realignments and production relocations are primary mitigation strategies, with pricing actions also contributing [70][71] Question: Humanoid market opportunities - Management clarified that the $100 million opportunity funnel is global, with recent wins primarily not based in China [102][104]

Financial Performance - Q1 2025 - Net sales were $1418.1 million, compared to $1428.9 million in 1Q24[9] - Adjusted EBITDA increased to $309.5 million, with a margin of 21.8%, up 30 BPS from the prior year[9, 12] - Adjusted diluted EPS was $2.15, a 7.5% increase year-over-year, or a 10% increase adjusted for the Industrial Systems divestiture[10, 12] - Free cash flow increased by 32% to $85.5 million[10, 12] - The company paid down $164 million of gross debt in 1Q[12] Segment Performance - Automation & Motion Control: Net sales were $396.3 million[24] - Industrial Powertrain Solutions: Net sales were $612.7 million[28] - Power Efficiency Solutions: Net sales were $409.1 million[32] Guidance and Outlook - The company reaffirmed its 2025 adjusted EPS guidance of approximately $10.00, with a range of $9.60-$10.40[40] - Full year sales are expected to be approximately $5.86 billion[40] - The company expects tariffs to be neutral to 2025 adjusted EBITDA and EPS due to mitigation actions[41] Balance Sheet - Total debt was $5296.9 million, and net debt was $4991.6 million[39] - Net Debt/Adjusted EBITDA was 3.62[39] - Interest Coverage Ratio was 3.78[39]

[Regal Rexnord Q1 2025 Financial Results](index=1&type=section&id=Regal%20Rexnord%20Reports%20Strong%20First%20Quarter%202025%20Financial%20Results) [First Quarter 2025 Highlights](index=1&type=section&id=1Q%20Highlights) Regal Rexnord reported strong Q1 2025 results, driven by **0.7% organic sales growth**, a **7.5% increase in Adjusted Diluted EPS to $2.15**, and **$85.5 million in free cash flow**, while reducing debt and seeing positive order momentum Q1 2025 Key Financial Metrics (Values in Millions, except per share and percentages) | Metric | Q1 2025 Value | Change vs. PY | Note | | :--- | :--- | :--- | :--- | | Sales | $1,418.1M | -8.4% | +0.7% on an Organic Basis | | Adjusted Diluted EPS | $2.15 | +7.5% | +10% excluding Industrial Systems | | GAAP Diluted EPS | $0.86 | +186.7% | - | | Adjusted EBITDA Margin | 21.8% | +30 bps | - | | Free Cash Flow | $85.5M | +32.4% | - | | Gross Debt Paid Down | $164M | - | Net Debt/Adj. EBITDA at ~3.6x | | Daily Orders | - | +3.3% | Excluding currency impacts | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Louis Pinkham highlighted all segments exceeded guidance, expressing optimism for organic growth despite macro uncertainty from U.S. trade policy, with plans to achieve **tariff cost neutrality by 2025** and **margin neutrality by mid-2026** - All segments exceeded guidance, with PES achieving **8.0% organic growth** and AMC returning to growth in discrete automation[2](index=2&type=chunk) - The company is cautiously optimistic about an organic growth inflection, supported by several quarters of positive orders growth and a sense that most end markets are at or near trough demand levels[2](index=2&type=chunk) - Recent shifts in U.S. trade policy and tariffs have heightened macro uncertainty, but the company has aggressive mitigation plans and expects to achieve **tariff cost neutrality in 2025**[2](index=2&type=chunk) [2025 Financial Guidance](index=2&type=section&id=FY%20Guidance) The company updated its **2025 GAAP Diluted EPS guidance** to **$4.49-$5.29** due to a Q1 asset sale gain, while reaffirming **full-year Adjusted Diluted EPS guidance** at **$9.60-$10.40**, expecting tariff impact neutralization through mitigation actions 2025 Full-Year Guidance | Metric | Guidance Range | | :--- | :--- | | GAAP Diluted EPS | $4.49 - $5.29 | | Adjusted Diluted EPS | $9.60 - $10.40 | - The company expects to neutralize the impact of current tariffs on its **2025 Adjusted EPS** through mitigation actions[4](index=4&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) In Q1 2025, segment performance was mixed, with **Power Efficiency Solutions (PES)** leading at **8.0% organic growth**, **Automation & Motion Control (AMC)** showing **0.4% organic growth**, and **Industrial Powertrain Solutions (IPS)** declining **3.4% organically** but maintaining a strong **26.9% adjusted EBITDA margin** [Automation & Motion Control (AMC)](index=2&type=section&id=Automation%20%26%20Motion%20Control) The AMC segment's **net sales** decreased **1.0% to $396.3 million** but achieved **0.4% organic growth**, driven by aerospace & defense and discrete automation, offsetting headwinds in other markets, with an **adjusted EBITDA margin** of **21.8%** AMC Q1 2025 Performance | Metric | Value | | :--- | :--- | | Net Sales | $396.3M (-1.0% YoY) | | Organic Sales Growth | +0.4% YoY | | Adjusted EBITDA Margin | 21.8% | [Industrial Powertrain Solutions (IPS)](index=2&type=section&id=Industrial%20Powertrain%20Solutions) The IPS segment reported **net sales** of **$612.7 million**, a **4.8% decrease** (**3.4% organic**), primarily due to weakness in metals & mining and machinery/off-highway markets, partially offset by energy growth, while maintaining a strong **adjusted EBITDA margin** of **26.9%** IPS Q1 2025 Performance | Metric | Value | | :--- | :--- | | Net Sales | $612.7M (-4.8% YoY) | | Organic Sales Growth | -3.4% YoY | | Adjusted EBITDA Margin | 26.9% | [Power Efficiency Solutions (PES)](index=2&type=section&id=Power%20Efficiency%20Solutions) The PES segment delivered strong results with **net sales** of **$409.1 million**, an increase of **6.2%** (**8.0% organic**), primarily driven by the North American residential HVAC market, achieving an **adjusted EBITDA margin** of **14.2%** PES Q1 2025 Performance | Metric | Value | | :--- | :--- | | Net Sales | $409.1M (+6.2% YoY) | | Organic Sales Growth | +8.0% YoY | | Adjusted EBITDA Margin | 14.2% | [Financial Statements](index=6&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For Q1 2025, Regal Rexnord reported **net sales** of **$1.42 billion**, down from **$1.55 billion** due to divestiture, but **net income attributable to the company** significantly increased to **$57.3 million** from **$19.8 million**, resulting in **diluted EPS** of **$0.86** compared to **$0.30** in Q1 2024 Q1 2025 vs. Q1 2024 Income Statement (in Millions, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Sales | $1,418.1 | $1,547.7 | | Gross Profit | $527.6 | $553.1 | | Income from Operations | $159.7 | $133.9 | | Net Income Attributable to Regal Rexnord | $57.3 | $19.8 | | Diluted EPS | $0.86 | $0.30 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, the company's **balance sheet** shows **total assets** of **$14.03 billion**, stable from year-end 2024, with **cash and cash equivalents** decreasing to **$305.3 million** from **$393.5 million**, **total debt** reduced to **$5.30 billion** from **$5.46 billion**, and **total equity** increasing to **$6.43 billion** Balance Sheet Highlights (in Millions) | Account | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $305.3 | $393.5 | | Total Current Assets | $2,753.4 | $2,751.3 | | Goodwill | $6,513.2 | $6,458.9 | | Total Assets | $14,032.3 | $14,033.7 | | Total Current Liabilities | $1,218.4 | $1,215.7 | | Long-Term Debt | $5,291.8 | $5,452.7 | | Total Equity | $6,430.4 | $6,267.2 | [Condensed Consolidated Statements of Cash Flow](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOW) In Q1 2025, **net cash provided by operating activities** increased to **$102.3 million** from **$83.1 million**, resulting in **$85.5 million** in **free cash flow** (a **32.4% YoY increase**), with **$192.5 million** used in **financing activities**, primarily for debt repayments Q1 2025 vs. Q1 2024 Cash Flow (in Millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $102.3 | $83.1 | | Net Cash Used in Investing Activities | ($3.5) | ($17.5) | | Net Cash Used in Financing Activities | ($192.5) | ($168.0) | | Net Decrease in Cash | ($88.2) | ($112.9) | - Free cash flow (Net Cash from Operations less Capex) was **$85.5 million** for Q1 2025, compared to **$64.6 million** in Q1 2024[35](index=35&type=chunk) [Non-GAAP Reconciliations](index=9&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including **Adjusted Diluted EPS**, **Organic Sales Growth**, **Adjusted EBITDA**, and **Free Cash Flow**, by removing effects of intangible amortization, restructuring, and non-recurring items to offer a clearer view of ongoing operational performance [Adjusted Diluted Earnings Per Share](index=9&type=section&id=ADJUSTED%20DILUTED%20EARNINGS%20PER%20SHARE) The company reconciled its **Q1 2025 GAAP Diluted EPS of $0.86** to an **Adjusted Diluted EPS of $2.15**, primarily by adding back intangible amortization (**$0.97**), restructuring costs (**$0.18**), and share-based compensation (**$0.13**) Q1 2025 GAAP to Adjusted EPS Reconciliation | Description | Per Share Amount | | :--- | :--- | | GAAP Diluted EPS | $0.86 | | Intangible Amortization | $0.97 | | Restructuring and Related Costs | $0.18 | | Share-Based Compensation Expense | $0.13 | | Transaction and Integration Related Costs | $0.08 | | Gain on Sale of Assets | ($0.07) | | **Adjusted Diluted EPS** | **$2.15** | [Organic Sales Growth](index=10&type=section&id=ORGANIC%20SALES%20GROWTH) Total company **net sales** declined **8.4% YoY** due to a **7.9% divestiture impact** and **1.2% negative currency impact**, resulting in **0.7% organic sales growth** in Q1 2025, led by **PES (+8.0%)** and **AMC (+0.4%)**, despite an **IPS decline (-3.4%)** Q1 2025 Organic Sales Growth by Segment | Segment | Net Sales Growth % | Foreign Currency Impact % | Divestitures % | Organic Sales Growth % | | :--- | :--- | :--- | :--- | :--- | | AMC | (1.0)% | (1.4)% | — % | 0.4% | | IPS | (4.8)% | (1.4)% | — % | (3.4)% | | PES | 6.2% | (0.9)% | (0.9)% | 8.0% | | **Total Regal Rexnord** | **(8.4)%** | **(1.2)%** | **(7.9)%** | **0.7%** | [Adjusted EBITDA](index=11&type=section&id=ADJUSTED%20EBITDA) Total company **Adjusted EBITDA** for Q1 2025 was **$309.5 million** with a **21.8% margin**, comparable to **$307.2 million** (**21.5% margin**) in Q1 2024 (excluding divested Industrial Systems), with **IPS** contributing the largest at **$164.9 million** (**26.9% margin**) Q1 2025 Adjusted EBITDA by Segment (in Millions) | Segment | Adjusted EBITDA | Adjusted EBITDA Margin % | | :--- | :--- | :--- | | AMC | $86.5 | 21.8% | | IPS | $164.9 | 26.9% | | PES | $58.1 | 14.2% | | **Total Regal Rexnord** | **$309.5** | **21.8%** | [Debt to EBITDA](index=13&type=section&id=DEBT%20TO%20EBITDA) As of March 31, 2025, the company's **total gross debt** was **$5.30 billion** and **net debt $4.99 billion**, resulting in a **Net Debt to LTM Adjusted EBITDA ratio of 3.83x**, which improves to **3.62x** including **$75.0 million** in expected synergies Debt Metrics as of March 31, 2025 (in Millions, except ratios) | Metric | Value | | :--- | :--- | | Total Gross Debt | $5,296.9 | | Net Debt | $4,991.6 | | LTM Adjusted EBITDA | $1,302.3 | | Net Debt/Adjusted EBITDA | 3.83x | | Adjusted EBITDA (including synergies) | $1,377.3 | | Net Debt/Adjusted EBITDA (including synergies) | 3.62x | [Company Information and Disclosures](index=3&type=section&id=Company%20Information%20and%20Disclosures) This section provides an overview of Regal Rexnord's global operations and segments, alongside crucial disclosures regarding forward-looking statements and associated risks, including those related to **acquisitions and divestitures**, **substantial indebtedness**, **supply chain disruptions**, and **trade policy and tariffs** [About Regal Rexnord](index=3&type=section&id=About%20Regal%20Rexnord) Regal Rexnord is a global company with **30,000 employees** providing sustainable power, transmission, and motion control solutions across **three segments**: **Industrial Powertrain Solutions**, **Power Efficiency Solutions**, and **Automation & Motion Control**, serving diverse end markets - The company is comprised of **three operating segments**: Industrial Powertrain Solutions, Power Efficiency Solutions, and Automation & Motion Control[11](index=11&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[10](index=10&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This section cautions that the report contains forward-looking statements subject to risks and uncertainties, including the ability to achieve synergies from **acquisitions and divestitures**, **substantial indebtedness**, **supply chain disruptions**, and changes in **trade policy and tariffs** - Forward-looking statements are subject to risks, including the ability to achieve expected benefits from the Altra acquisition and Industrial Systems divestiture[12](index=12&type=chunk) - The company's **substantial indebtedness** is cited as a risk factor affecting financial flexibility[12](index=12&type=chunk) - Uncertainty in trade policy, including **tariffs on imports and export restrictions**, is highlighted as a significant risk[12](index=12&type=chunk)

Core Insights - Regal Rexnord (RRX) reported revenue of $1.42 billion for the quarter ended March 2025, reflecting an 8.4% decline year-over-year, while EPS increased to $2.15 from $2.00 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $1.37 billion by 3.44%, and the EPS surpassed the consensus estimate of $1.82 by 18.13% [1] Revenue Breakdown - Automation & Motion Control (AMC) revenues were $396.30 million, exceeding the two-analyst average estimate of $380.10 million, with a year-over-year change of -1% [4] - Industrial Powertrain Solutions (IPS) revenues reached $612.70 million, slightly below the average estimate of $614.62 million, representing a year-over-year decline of 4.8% [4] - Power Efficiency Solutions (PES) revenues amounted to $409.10 million, surpassing the average estimate of $385.58 million, with a year-over-year increase of 6.2% [4] Stock Performance - Regal Rexnord shares have returned +13% over the past month, significantly outperforming the Zacks S&P 500 composite, which saw a change of +0.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Performance - Regal Rexnord reported quarterly earnings of $2.15 per share, exceeding the Zacks Consensus Estimate of $1.82 per share, and up from $2 per share a year ago, representing an earnings surprise of 18.13% [1] - The company posted revenues of $1.42 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.44%, but down from $1.55 billion year-over-year [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.39 on revenues of $1.48 billion, and for the current fiscal year, it is $9.77 on revenues of $5.85 billion [7] - The estimate revisions trend for Regal Rexnord is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Market Performance - Regal Rexnord shares have declined approximately 28% since the beginning of the year, contrasting with the S&P 500's decline of 3.3% [3] - The Manufacturing - General Industrial industry, to which Regal Rexnord belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Core Insights - Regal Rexnord Corporation reported a strong start to 2025, with all segments exceeding guidance, achieving positive organic growth, and increasing free cash flow by 32% [2][3][8] - The company anticipates achieving tariff cost neutrality in 2025 and margin neutrality by mid-2026, despite macroeconomic uncertainties due to recent shifts in U.S. trade policy [2][3][8] Financial Performance - The company reported GAAP diluted earnings per share of $0.86 and adjusted diluted earnings per share of $2.15, representing a 7.5% increase year-over-year [8][19] - Free cash flow for the first quarter was $85.5 million, up 32.4% compared to the previous year [8] - Net sales for the first quarter were $1,418.1 million, down 8.4% year-over-year, but up 0.7% on an organic basis [8][21] Segment Performance - The Automation & Motion Control segment had net sales of $396.3 million, a decrease of 1.0%, but an increase of 0.4% on an organic basis, driven by growth in aerospace and defense [9][21] - The Industrial Powertrain Solutions segment reported net sales of $612.7 million, down 4.8%, reflecting declines in metals and mining markets [9][21] - The Power Efficiency Solutions segment achieved net sales of $409.1 million, an increase of 6.2%, primarily due to growth in the North American residential HVAC market [9][21] Guidance - The company updated its annual guidance for 2025 GAAP diluted earnings per share to a range of $4.49 to $5.29, while reaffirming adjusted diluted earnings per share guidance of $9.60 to $10.40 [3][19] - Mitigation actions are expected to neutralize the impact of current tariffs on 2025 adjusted earnings per share [3][19] Cash Flow and Debt Management - The company paid down $164 million of gross debt in the first quarter, resulting in a net debt to adjusted EBITDA ratio of approximately 3.6x [8][19] - Cash from operating activities was reported at $102.3 million for the quarter [8][19]

Group 1 - Regal Rexnord Corp has seen a significant increase in investment from Viking Global Investors, with a 309.19% increase in its stake after acquiring 2.68 million shares [1] - Despite a 39.91% decline in stock value over the past year and a 35.81% drop in 2025, Viking's investment indicates a belief in potential recovery [2] - Regal Rexnord is set to report its first-quarter earnings on May 5, which could influence market perception if results indicate a turnaround [3] Group 2 - The industrials sector is currently facing challenges due to tightening capital expenditure budgets and macroeconomic uncertainty, but Regal Rexnord's diversified portfolio may provide resilience [4] - The stock has declined an additional 18.51% this month, yet Viking's investment suggests a view of opportunity rather than risk [4]