Company Leadership Transition - Regal Rexnord Corporation has appointed Kevin Long as Executive Vice President & President of the Automation & Motion Control segment, effective August 14, 2025, succeeding Kevin Zaba who will retire after 11 years with the company [1][2] - Kevin Zaba will remain with Regal Rexnord as EVP until December 31, 2025, to ensure a smooth transition [1] Kevin Long's Background - Kevin Long brings over 30 years of experience in leading global industrial businesses, with a strong track record in driving above-market growth and operational excellence [2] - Prior to joining Regal Rexnord, Long served as Group President at Dover Corporation, where he significantly grew the OPW business through organic execution and acquisitions [2] - Long has held senior leadership roles at Danaher Corporation, contributing to growth and operational synergies across multiple business units [3] Company Vision and Market Position - CEO Louis Pinkham expressed excitement about Long's appointment, highlighting his proven leadership and deep industrial experience as key factors for leading AMC's growth and innovation [4] - Long emphasized Regal Rexnord's strong portfolio and significant growth opportunities, indicating a customer-focused approach [4] - Regal Rexnord operates in various end markets, including discrete automation, food & beverage, aerospace, medical, data center, energy, residential and commercial buildings, general industrial, and metals and mining, benefiting from meaningful secular demand tailwinds [6][7] Company Overview - Regal Rexnord is comprised of three operating segments: Automation & Motion Control, Industrial Powertrain Solutions, and Power Efficiency Solutions [7] - The company is headquartered in Milwaukee, Wisconsin, and has manufacturing, sales, and service facilities worldwide [7]

Q2 2025 Performance - Net sales decreased by 1.2% organically, aligning with expectations, with large project timing headwinds in Metals & Mining and temporary rare earth magnet availability issues, offset by strength in Residential & Commercial HVAC and Aerospace[10] - Daily orders were down 2.5% year-over-year, but flat when factoring in a $35 million data center order in AMC received early in July[10] - Adjusted gross margin was 38.2%, impacted by temporary rare earth magnet availability[10] - Adjusted EBITDA margin was 22.0%, including $17 million in synergies[10] - Adjusted EPS increased by 8.3% to $2.48[10] - Adjusted free cash flow was $493 million, with $469.8 million used to pay down gross debt and $368.5 million contributed by a new receivables securitization program[10] Segment Performance - Automation & Motion Control (AMC) net sales decreased by 2.6%, with organic sales down 3.4%, driven by Medical, Data Center project timing, and rare earth magnet availability, partially offset by Aerospace[21] - Industrial Powertrain Solutions (IPS) net sales decreased by 3.8%, with organic sales down 4.4%, primarily due to Metals & Mining[25] - Power and Efficiency Solutions (PES) net sales increased by 5.9%, with organic sales up 6.5%, driven by R-HVAC and C-HVAC[29] Debt and Leverage - The company closed on a $400 million accounts receivable securitization facility maturing in 2026, with initial proceeds of $368.5 million used to repay bank debt[31] - The securitization facility is expected to provide ~$4 million in net annualized interest savings and improve debt to equity and leverage ratios[31] - Net debt at the end of Q2 2025 was $4.5347 billion[46] - Leverage ratio (Net Debt to Adjusted EBITDA including synergies) decreased to 3.34[30] 2025 Guidance - Sales guidance is rising to ~$5.95 billion due to FX and tariff pricing impacts[32] - Organic growth is expected to be approximately flat to low single digits[32] - Adjusted EBITDA margin guidance is down ~50bps to ~22.5% due to larger FX headwinds, tariffs, and lower AMC margins (rare earth magnet costs, latest mix impacts)[34] - Adjusted EPS guidance is reaffirmed at ~$10.00, with a narrowed range of $9.70-$10.30[32]

Core Insights - Regal Rexnord Corporation reported strong performance in Q2 2025, with sales and earnings slightly exceeding expectations, driven by growth in the PES segment and margin expansion in IPS despite market challenges [3][5][12] - The company has updated its annual guidance for GAAP diluted earnings per share to a range of $4.50 to $5.10 and adjusted diluted earnings per share to a range of $9.70 to $10.30, with mitigation actions in place to counteract tariff impacts [5][21] - The company ended Q2 with a $300 million cross-sell opportunity funnel and is on track to realize $170 million of cross-sell synergies this year, aiming for $250 million by 2027 [3][5] Financial Performance - Q2 2025 net sales were $1,496.1 million, a decrease of 3.3% compared to the previous year, with organic sales down 1.2% [11][12] - GAAP net income for Q2 2025 was $79.6 million, up from $63.0 million in Q2 2024, with adjusted EBITDA of $329.7 million [11][19] - The adjusted diluted earnings per share for Q2 2025 was $2.48, an increase of 8.3% compared to the previous year [11][19] Segment Performance - The PES segment achieved net sales of $435.2 million, reflecting a 5.9% increase, driven by strong performance in residential and commercial HVAC markets [12][24] - The IPS segment reported net sales of $649.8 million, a decrease of 3.8%, primarily due to project timing in the metals and mining market [12][24] - The Automation & Motion Control segment saw net sales of $411.1 million, a decrease of 2.6%, impacted by challenges in the medical market and sourcing rare earth magnets [12][24] Cash Flow and Debt Management - The company entered into a $400 million accounts receivable securitization facility, contributing $368.5 million to operating cash flows in Q2 2025, which was used to repay a significant portion of existing bank loans [4][11] - Cash from operating activities for Q2 2025 was $523.2 million, with adjusted free cash flow of $493 million, including proceeds from the receivables securitization facility [11][23] - The company paid down $469.8 million of gross debt, resulting in a net debt to adjusted EBITDA ratio of approximately 3.3x [11][23]

Creating a better tomorrow™… First Quarter 2025 Earnings May 6, 2025 Louis Pinkham, Chief Executive Officer Industrial Rob Rehard, Executive Vice President, Chief Financial Officer Motion Control Solutions Systems 1Q 2025 FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES All statements in this communication, other than those relating to historical facts, are "forward-looking statements." Forward-looking statements can generally be identified by their use of terms such as "anticipate," "believe," "c ...

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]

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]