REGAL REXNORD REPORTS FOURTH QUARTER 2024 FINANCIAL RESULTS

Core Insights - Regal Rexnord Corporation reported a weaker-than-expected top line in Q4 2024, with sales of $1,461.1 million, down 9.1% year-over-year, and down 1.4% on an organic basis [3][8] - The company achieved an adjusted gross margin of 37.1%, up 60 basis points from the previous year, and surpassed its annual synergy target by $11 million [3][8] - For 2025, Regal Rexnord provided guidance for GAAP diluted earnings per share in the range of $4.42 to $5.22 and adjusted diluted earnings per share in the range of $9.60 to $10.40 [2] Financial Performance - Q4 2024 GAAP net income was $42.0 million compared to $56.6 million in Q4 2023, while adjusted diluted EPS was $2.34, up 2.6% year-over-year [8][22] - The company paid down $205 million of gross debt in Q4 and $938 million for the full year, exceeding its targeted reduction [3][8] - Cash from operating activities was $213.2 million, with adjusted free cash flow of $185.3 million, an increase of 8.4% compared to the previous year [8] Segment Performance - The Automation & Motion Control segment reported net sales of $409.8 million, a decrease of 2.6%, while the Industrial Powertrain Solutions segment had net sales of $635.0 million, down 2.3% [9][20] - The Power Efficiency Solutions segment saw net sales of $416.3 million, a slight decrease of 0.4%, but experienced growth in residential HVAC markets [9][20] - Adjusted EBITDA margins for the segments were 21.6% for Automation & Motion Control, 26.0% for Industrial Powertrain Solutions, and 15.3% for Power Efficiency Solutions [9][20] Strategic Initiatives - The company is focusing on growth, margin improvement, and debt reduction initiatives, with a notable partnership announced with Honeywell to collaborate on electric aircraft [3][8] - Regal Rexnord is on track to achieve a 40% adjusted gross margin by the end of 2025, following a year of transformation that included the divestiture of the Industrial Systems business [3][8] - The company is cautiously optimistic about 2025, citing improving orders and growth prospects, particularly in the latter half of the year [3][8]