[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]

Company Overview - Regal Rexnord Corporation plans to release its first quarter 2025 financial results after the market closes on May 5, 2025 [1] - A conference call to discuss the earnings release is scheduled for May 6, 2025, at 9:00 am CT (10:00 am ET) [2] - The company has a global workforce of 30,000 associates focused on providing sustainable solutions for motion control [4] Business Segments and Market Demand - Regal Rexnord operates in three segments: Industrial Powertrain Solutions, Power Efficiency Solutions, and Automation & Motion Control [6] - The company serves various end markets, including factory automation, food & beverage, aerospace, medical, data center, warehouse, alternative energy, residential and commercial buildings, general industrial, construction, metals and mining, and agriculture [5] - The end markets are experiencing meaningful secular demand tailwinds, indicating strong growth potential [5] Communication and Accessibility - A webcast replay of the earnings call will be available for three months after the event [3] - For those unable to attend the live call, a telephone replay will also be accessible [3]

Company Overview - Regal Rexnord Corporation operates globally with 30,000 associates, providing sustainable solutions that power, transmit, and control motion [3] - The company offers electric motors, air moving subsystems, and a portfolio of power transmission components for industrial applications [3] - Regal Rexnord's automation offerings include controllers, drives, precision motors, and actuators for various applications [3] Market Segments - The company serves multiple end markets, including factory automation, food & beverage, aerospace, medical, data centers, warehouse, alternative energy, residential and commercial buildings, general industrial, construction, metals and mining, and agriculture [4] - These markets benefit from significant secular demand tailwinds, indicating strong growth potential [4] Business Structure - Regal Rexnord is organized into three operating segments: Industrial Powertrain Solutions, Power Efficiency Solutions, and Automation & Motion Control [5] - The company is headquartered in Milwaukee, Wisconsin, with manufacturing, sales, and service facilities worldwide [5] Recent Developments - The CEO and CFO presented at the Bank of America Global Industrials Conference 2025, discussing the company's strategy, growth initiatives, capital deployment, and plans to mitigate tariff impacts [1]

Core Viewpoint - Regal Rexnord Corporation is providing insights into the estimated impacts of current and potential U.S. tariffs on imports from Canada, China, and Mexico, as well as on steel and aluminum, during its participation at the Bank of America Global Industrials Conference 2025 [1] Group 1: Tariff Impact Estimates - The company estimates a gross, unmitigated annualized cost impact from existing tariffs at approximately $60 million, with most goods imported from Canada and Mexico being exempt from tariffs due to compliance with the USMCA [2] - Tariffs currently in place are expected to have a negligible impact on the company's first quarter 2025 results [4] Group 2: Mitigation Plans - The company has developed plans to fully mitigate the impacts of tariffs, which may include supply chain realignments, production relocations, and pricing actions, aiming to be at least price/cost neutral on a dollar basis [3] - The company expects to achieve margin neutrality by the end of 2025 under the current tariff regime, or by the first half of 2026 if there are no USMCA exclusions [3] Group 3: Company Overview - Regal Rexnord employs around 30,000 associates globally, providing sustainable solutions that power, transmit, and control motion through electric motors and power transmission components [5] - The company's end markets include factory automation, food & beverage, aerospace, medical, data centers, and alternative energy, benefiting from significant secular demand tailwinds [6] - Regal Rexnord operates through three segments: Industrial Powertrain Solutions, Power Efficiency Solutions, and Automation & Motion Control [7]

Core Insights - The last six months have been challenging for Regal Rexnord, primarily due to sentiment and valuation issues rather than operational performance [1] - It appears that the destocking phase is largely over, indicating a potential stabilization in inventory levels [1]

Acquisitions and Divestitures - Regal Rexnord Corporation signed an agreement to sell its industrial motors and generators businesses for a total price of $444.0 million, with the transaction closing on April 30, 2024[23]. - The acquisition of Altra was completed on March 27, 2023, for a total purchase price of $5.1 billion, enhancing Regal Rexnord's automation portfolio and industrial power transmission capabilities[25]. - The acquisition of Altra contributed $442.5 million to net sales growth, while the divestiture of the industrial motors and generators businesses negatively impacted sales by $342.7 million[204]. - The company plans to continue making acquisitions as part of its growth strategy, but successful integration and profitability of these acquisitions are not assured[94]. - The success of acquisitions, such as the Altra Transaction, relies on realizing anticipated benefits, which may not be guaranteed[90]. Financial Performance - For the year ended December 31, 2024, Regal Rexnord Corporation reported annual net sales of $6.0 billion, a decrease from $6.3 billion in 2023[181]. - In 2024, consolidated net sales were $6,033.8 million, a decrease of $216.9 million or 3.5% compared to 2023, driven by a 5.0% organic sales decline and a negative foreign currency translation impact of 0.3%[204]. - Gross profit for 2024 increased by $123.7 million or 6.0% to $2,191.0 million, primarily due to $175.2 million from the acquisition of Altra[204]. - Operating expenses decreased by $129.2 million or 7.6% to $1,561.0 million, mainly due to the divestiture of the industrial motors and generators businesses[204]. - The effective tax rate for 2024 was 20.0%, a significant improvement from (3,293.8)% in 2023, reflecting lower US tax on foreign earnings[209]. - Diluted earnings per share for 2025 are expected to be between $4.42 and $5.22, based on an effective tax rate of 21.5%[201]. Market Strategy and Growth - The company aims to double its new product vitality in the medium term, focusing on serving secular growth markets and enhancing energy efficiency[21]. - Regal Rexnord's strategy includes raising exposure to markets with secular growth tailwinds, such as residential HVAC and alternative energy[21]. - Approximately 40% of Regal Rexnord's sales are derived from the distributor channel, reflecting less cyclical aftermarket transactions[22]. - The company expects to maintain strong free cash flow generation, supporting post-acquisition de-leveraging and funding inorganic growth initiatives[29]. - Regal Rexnord maintains a strong portfolio of highly-engineered products and trusted brands, investing in product development to meet customer needs[21]. Research and Development - Regal Rexnord's research and development efforts are focused on energy efficiency, embedded intelligence, and variable speed technology solutions to enhance product offerings[34]. - The company is investing in new technologies and product enhancements, particularly in IoT and AI, to maintain competitiveness in evolving industries[64][65]. Workforce and Community Engagement - The company employed approximately 30,800 associates worldwide as of December 31, 2024, with 30,300 being full-time[43]. - In 2024, over 95% of full-time professional associates participated in the performance management process[45]. - The company allocated $1.1 million in 2024 to support charitable organizations in the communities where associates live and work across the US, Mexico, and Canada[50]. - The company emphasizes diversity, engagement, and inclusion as core values, seeking a workforce that reflects the communities in which it operates[48]. - The company has established a robust training and professional development program to help employees achieve their career objectives[44]. Environmental and Regulatory Commitments - The company aims to achieve carbon emission neutrality in its operations across scopes 1 and 2 by 2032, and net-zero across scopes 1, 2, and 3 by 2050[51]. - The company has committed to achieving Scope 1 and Scope 2 carbon emission neutrality by 2032 and net zero across all scopes by 2050, which may increase operational costs[87]. - The company is subject to various environmental laws and regulations, which could impose significant costs and liabilities if not complied with[137]. - Known environmental liabilities may adversely affect the company's business, with potential undisclosed conditions also posing risks[139]. Risks and Challenges - The company is dependent on a limited number of suppliers for key materials, which may affect its business if those suppliers fail to meet commitments[60]. - Significant portions of revenue depend on key customers and distributors, and any loss or reduction in purchases from these parties could materially impact the business[68]. - The company faces risks related to climate change, including increased costs and operational disruptions due to regulatory developments[83][84]. - The company may incur significant costs related to product recalls or liabilities, particularly for high-volume applications, which could adversely affect financial results[74]. - Cybersecurity threats pose a risk to the company's information technology infrastructure, which could lead to unauthorized disclosures and significant financial liability[131]. Operational Efficiency - The company leverages a flexible global manufacturing presence to navigate disruptions and improve service levels, including higher product availability and shorter lead times[21]. - The company continuously evaluates its property portfolio to ensure efficient use of facilities[41]. - The company operates 143 facilities in the IPS segment, with a total of approximately 10.4 million square feet, of which 31% are leased[160]. - The PES segment includes 56 facilities, totaling approximately 4.7 million square feet, with 28% leased[161]. - The AMC segment has 72 facilities, covering approximately 3.2 million square feet, with 58% leased[163].