Regal Rexnord (NYSE: RRX) boosts Q2 net income to $116.6M, trims debt
Regal Rexnord Corporation reported stronger results for the quarter and six months ended June 30, 2026. Q2 net sales were $1,558.4 million, up 4.2%, with gross margin improving to 39.2%. Income from operations rose to $215.2 million and net income attributable to the company increased to $116.6 million, or diluted EPS of $1.74.
For the first half of 2026, net sales reached $3,037.5 million, also up 4.2%, and net income attributable rose to $181.0 million, while the effective tax rate declined to 17.7%. Growth was led by Automation & Motion Control, which delivered 15.8% higher sales; Industrial Powertrain Solutions also increased sales, while Power Efficiency Solutions saw lower sales but higher margins.
Results benefited from a pre-tax gain of $33.0 million from IEEPA tariff refunds, primarily reducing cost of sales. Operating cash flow for the first half was $191.6 million versus $625.5 million a year earlier as receivables, inventories, and other working capital items used cash. At June 30, 2026, cash was $441.6 million and long-term debt $4,587.6 million after refinancing 2026 senior notes with an $850.0 million term facility and maintaining access to a $1,500.0 million revolving credit line and a $430.0 million receivables securitization facility.
Positive
- Q2 2026 net sales increased 4.2% to $1,558.4 million, with consolidated gross margin improving to 39.2% and net income attributable rising to $116.6 million from $79.2 million a year earlier.
- IEEPA tariff refunds provided a one-time pre-tax benefit of $33.0 million in the first half of 2026, supporting higher gross profit in all three segments.
Negative
- Net cash provided by operating activities for the first half of 2026 declined to $191.6 million from $625.5 million in the prior-year period as changes in receivables, inventories, and other assets and liabilities significantly reduced cash.
Filing Explained
The quarter adds a CEO transition and leaves a $17.1 million tariff-refund receivable outstanding while renewing receivables funding.
Form 10-Q is an unaudited quarterly update; this filing covers the quarter ended
The company submitted
The receivables securitization facility was renewed for 18 months with capacity increased to
The filing expects
Key Figures
Q2 2026 Net Sales: $1,558.4 million
Q2 2026 Net Income Attributable: $116.6 million
Q2 2026 Diluted EPS: $1.74
+5 more
8 metrics
Q2 2026 Net Sales
$1,558.4 million
Three months ended June 30, 2026 consolidated net sales
Q2 2026 Net Income Attributable
$116.6 million
Net income attributable to Regal Rexnord Corporation in Q2 2026
Q2 2026 Diluted EPS
$1.74
Earnings per share assuming dilution for the quarter ended June 30, 2026
H1 2026 Operating Cash Flow
$191.6 million
Net cash provided by operating activities for six months ended June 30, 2026
Cash and Cash Equivalents
$441.6 million
Balance at June 30, 2026 on the condensed consolidated balance sheet
Long-Term Debt
$4,587.6 million
Long-term debt outstanding as of June 30, 2026
IEEPA Tariff Refund Benefit
$33.0 million
Pre-tax benefit recorded for the three and six months ended June 30, 2026
Remaining Performance Obligations
$884.0 million
Estimated future revenue from unsatisfied performance obligations as of June 30, 2026
Key Terms
International Emergency Economic Powers Act, receivables securitization facility, Performance Share Units, Accumulated Other Comprehensive Income (Loss), +2 more
6 terms
International Emergency Economic Powers Act regulatory
"tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were not authorized"
A U.S. law that gives the president broad authority to control trade, financial transactions, and assets during a declared national emergency, such as by imposing sanctions, freezing property, or restricting exports and imports. For investors it matters because those powers can suddenly block deals, cut off access to markets or funds, and change the value of companies or securities much like an emergency brake that can stop or reroute economic activity overnight.
receivables securitization facility financial
"entered into a one-year $400.0 million accounts receivable securitization facility"
Performance Share Units financial
"For the six months ended June 30, 2026, the Company issued 42,568 Performance Share Units"
Performance share units are a type of company stock award given to employees that depend on the company meeting specific goals or targets. If these goals are achieved, the employee receives shares or the value of shares; if not, they may receive little or no compensation. This aligns employees’ interests with the company's success and encourages performance that benefits investors.
Accumulated Other Comprehensive Income (Loss) financial
"Foreign currency translation adjustments, unrealized gains and losses are included in Accumulated Other Comprehensive Income (Loss)"
A balance-sheet line that tracks certain gains and losses that haven’t flowed through the company’s profit-and-loss statement, such as unrealized changes in the value of investments, foreign-currency adjustments, and some pension-related items. Think of it like a storage closet for value swings the company hasn’t ‘realized’ by selling or settling them yet; it changes shareholders’ equity and helps investors see hidden volatility or potential future impacts on book value.
cash flow hedges financial
"The Company designates commodity forward contracts as cash flow hedges of forecasted purchases"
A cash flow hedge is an accounting label companies use when they enter financial contracts—like currency or interest-rate agreements—to protect expected future cash payments or receipts from unpredictable moves. For investors, it signals that the company is trying to smooth out future cash variability (think of locking in a price to avoid surprises), which can reduce reported profit swings but also means the company has exposure to derivative instruments and their associated risks.
Rabbi Trust financial
"Level 1 fair value measurements for assets held in a Rabbi Trust are unadjusted quoted prices"
A rabbi trust is a special account a company sets up to hold promised future pay for executives, like bonus or retirement money, so those employees can see there are funds earmarked for them. It matters to investors because it signals the company’s commitment to keep key people, but the money is still part of the company’s assets and can be claimed by creditors if the company goes bankrupt—think of it as a labeled jar that isn’t completely off-limits.
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FAQ
How did Regal Rexnord (RRX) perform in the second quarter of 2026?
Regal Rexnord (RRX) generated Q2 2026 net sales of $1,558.4 million, up 4.2%, and net income attributable of $116.6 million, or diluted EPS of $1.74. Gross margin improved to 39.2%, and income from operations reached $215.2 million.
What were Regal Rexnord (RRX)’s year-to-date 2026 results by segment?
For the six months ended June 30, 2026, Automation & Motion Control net sales were $934.8 million, up 15.8%. Industrial Powertrain Solutions delivered $1,317.7 million, and Power Efficiency Solutions reported $785.0 million, compared with $807.4 million, $1,262.5 million and $844.3 million, respectively, in 2025.
What impact did IEEPA tariff refunds have on Regal Rexnord (RRX) in 2026?
IEEPA tariff refunds provided a $33.0 million pre-tax benefit for the three and six months ended June 30, 2026. The company submitted $38.1 million of refund claims, received $21.0 million in cash, recorded a $17.1 million receivable, and reduced cost of sales by $32.0 million.
How strong is Regal Rexnord (RRX)’s cash flow and liquidity so far in 2026?
Net cash provided by operating activities was $191.6 million for the first half of 2026, versus $625.5 million a year earlier. At June 30, 2026, cash and cash equivalents totaled $441.6 million, with $1,427.5 million of available borrowing capacity on the $1,500.0 million revolving credit facility.
What is Regal Rexnord (RRX)’s debt structure as of June 30, 2026?
Total debt was $4,611.8 million, including $3,600.0 million of senior notes, an $850.0 million 2025 Term Facility, $72.5 million drawn on the 2025 Revolving Facility, and $18.1 million of Altra notes. Long-term debt totaled $4,587.6 million.
What remaining performance obligations does Regal Rexnord (RRX) report?
As of June 30, 2026, Regal Rexnord estimated $884.0 million of revenue to be recognized from unsatisfied or partially unsatisfied performance obligations. About 11.9% is expected in the remainder of 2026, 71.4% in 2027, and 16.7% thereafter.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
for the quarterly period ended June 30, 2026 or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission file number 001-07283
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) | |||||||
(Address of principal executive offices)
(608 ) 364-8800
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
☒ | Accelerated Filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller Reporting Company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On July 31, 2026 the registrant had outstanding 66,591,867 shares of common stock, $0.01 par value per share.
REGAL REXNORD CORPORATION
INDEX
| Page | ||||||||
PART I — FINANCIAL INFORMATION | ||||||||
| Item 1 — | Condensed Consolidated Financial Statements (Unaudited) | |||||||
Condensed Consolidated Statements of Income | 5 | |||||||
Condensed Consolidated Statements of Comprehensive Income | 6 | |||||||
Condensed Consolidated Balance Sheets | 7 | |||||||
Condensed Consolidated Statements of Equity | 8 | |||||||
Condensed Consolidated Statements of Cash Flows | 10 | |||||||
Notes to Condensed Consolidated Financial Statements | 11 | |||||||
1. Basis of Presentation | 11 | |||||||
2. Other Financial Information | 11 | |||||||
3. Accumulated Other Comprehensive Income (Loss) | 15 | |||||||
4. Goodwill and Intangible Assets | 16 | |||||||
5. Segment Information | 17 | |||||||
6. Receivables Securitization | 20 | |||||||
7. Debt and Bank Credit Facilities | 21 | |||||||
8. Retirement Plans | 23 | |||||||
9. Shareholders' Equity | 23 | |||||||
10. Income Taxes | 24 | |||||||
11. Earnings Per Share | 24 | |||||||
12. Contingencies | 24 | |||||||
13. Derivative Financial Instruments | 25 | |||||||
14. Fair Value | 30 | |||||||
15. Restructuring Activities | 31 | |||||||
| Item 2 — | Management's Discussion and Analysis of Financial Condition and Results of Operations | 33 | ||||||
| Item 3 — | Quantitative and Qualitative Disclosures about Market Risk | 44 | ||||||
| Item 4 — | Controls and Procedures | 47 | ||||||
PART II — OTHER INFORMATION | ||||||||
| Item 1 — | Legal Proceedings | 47 | ||||||
| Item 1A — | Risk Factors | 47 | ||||||
| Item 2 — | Unregistered Sales of Equity Securities and Use of Proceeds | 47 | ||||||
| Item 5 — | Other Information | 47 | ||||||
| Item 6 — | Exhibits | 48 | ||||||
Signatures | 49 | |||||||
2
CAUTIONARY STATEMENT
All statements in this report, other than those relating to historical facts, are “forward-looking statements” within the meaning of federal securities laws. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “believe,” “confident,” “estimate,” “expect,” “intend,” “aim,” “seek,” “target,” “plan,” “may,” “will,” “would,” “project,” “forecast,” “predict,” “could,” “should,” and similar expressions including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such statements. Forward-looking statements include, but are not limited to, statements about future financial and operating results, future strategic plans and objectives, and expected market or macroeconomic trends. Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements in this report include, without limitation:
•the possibility that Regal Rexnord Corporation (the "Company") may be unable to achieve expected benefits, synergies and operating efficiencies in connection with the sale of the Industrial Motors and Generators businesses in 2024 and the acquisition of Altra Industrial Motion Corp. in 2023 (the "Altra Transaction") within the expected time-frames or at all and to successfully integrate Altra Industrial Motion Corp. (“Altra”);
•the Company’s substantial indebtedness as a result of the Altra Transaction and the effects of such indebtedness on the Company’s financial flexibility;
•the Company’s ability to achieve its objectives on reducing its indebtedness on the desired timeline or at all;
•dependence on key suppliers and the potential effects of supply disruptions;
•fluctuations in commodity prices and raw material costs as a result of, among other things, changes to trade policies, imposition of tariffs or trade restrictions, and other governmental regulations affecting trade;
•any unforeseen changes to or the effects on liabilities, future capital expenditures, revenue, expenses, synergies, indebtedness, financial condition, losses and future prospects;
•unanticipated operating costs, customer loss and business disruption or the Company’s inability to forecast customer needs;
•the Company's ability to attract, transition or retain key executives and employees and risks associated with the transition of our new CEO;
•uncertainties regarding the Company's ability to execute its restructuring/strategic plans within expected costs and timing or at all;
•challenges to the tax treatment that was elected with respect to the merger with the Rexnord PMC business and related transactions;
•actions taken by competitors and their ability to effectively compete in the increasingly competitive global industries and markets;
•the Company's ability to develop new products based on technological innovation and marketplace acceptance of new and existing products;
•our ability to keep pace with rapidly evolving technological developments related to advances in artificial intelligence;
•dependence on significant customers and distributors;
•risks that customers may make changes and adjustments to their orders which could result in actual revenue recognized being lower or higher than disclosed order values;
•risks associated with climate change, including unexpected weather events in markets in which we do business, and uncertainty regarding the Company's ability to deliver on its sustainability commitments or to meet related investor, customer and other third party expectations relating to the Company's sustainability efforts and rapidly evolving sustainability regulations;
•changes to and uncertainty in trade policy, including tariffs on imports into the US from Canada, Mexico, China, India and other countries, and retaliatory tariffs and import/export restrictions, including Chinese export restrictions on certain rare earth minerals, or other trade restrictions imposed by the US or other governments;
•risks associated with global manufacturing, including risks associated with public health crises and political, societal or economic instability, including instability caused by ongoing geopolitical conflicts;
•issues and costs arising from the integration of acquired companies and businesses;
3
•prolonged declines or disruptions in one or more markets, including disruptions caused by labor disputes or other labor activities, natural disasters, terrorism, acts of war, international conflicts, pandemics and political and government actions;
•risks associated with excess or obsolete inventory charges, including related write-offs or write-downs;
•economic changes in global markets, such as reduced demand for products, currency exchange rates, inflation rates, interest rates, recession, government policies, including policy changes affecting taxation, trade, tariffs, import/export regulations, immigration, customs, border actions and the like, and other external factors that the Company cannot control;
•product liability, asbestos and other litigation, or claims by end users, government agencies or others that products or customers' applications failed to perform as anticipated;
•unanticipated liabilities of acquired businesses;
•the Company's ability to identify and execute on future mergers and acquisitions (“M&A”) opportunities or other strategic transactions;
•the impact of such M&A or other transactions on the Company's results, operations and financial condition, including the impact from costs to execute and finance any such transactions;
•unanticipated costs or expenses that may be incurred related to product warranty issues, recalls or reworks;
•infringement of intellectual property by third parties, challenges to intellectual property, and claims of infringement on third party technologies;
•risks related to foreign currency fluctuations or changes in global commodity prices or interest rates;
•effects on earnings of any significant impairment of goodwill;
•losses from failures, breaches, attacks or disclosures involving information technology infrastructure and data;
•costs and unanticipated liabilities arising from rapidly evolving laws and regulations, including data privacy laws, labor and employment laws, environmental laws and regulations;
•risks associated with stock price volatility;
and other factors that can be found in our filings with the Securities and Exchange Commission (the "SEC"), including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. Forward-looking statements are given only as of the date of this report and we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
4
PART I—FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
REGAL REXNORD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in Millions, Except Per Share Data)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||
| Net Sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of Sales | |||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Income from Operations | |||||||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||
| Interest Income | ( | ( | ( | ( | |||||||||||||||||||
| Other Expense, Net | |||||||||||||||||||||||
| Income before Taxes | |||||||||||||||||||||||
| Provision for Income Taxes | |||||||||||||||||||||||
| Net Income | |||||||||||||||||||||||
| Less: Net Income Attributable to Noncontrolling Interests | |||||||||||||||||||||||
| Net Income Attributable to Regal Rexnord Corporation | $ | $ | $ | $ | |||||||||||||||||||
| Earnings Per Share Attributable to Regal Rexnord Corporation: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Assuming Dilution | $ | $ | $ | $ | |||||||||||||||||||
| Weighted Average Number of Shares Outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Assuming Dilution | |||||||||||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements
5
REGAL REXNORD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in Millions)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||
| Net Income | $ | $ | $ | $ | |||||||||||||||||||
| Other Comprehensive Income (Loss) Net of Tax: | |||||||||||||||||||||||
| Foreign Currency Translation Adjustments | ( | ||||||||||||||||||||||
| Hedging Activities: | |||||||||||||||||||||||
| Increase in Fair Value of Hedging Activities | |||||||||||||||||||||||
| Reclassification of Gains Included in Net Income | ( | ( | ( | ( | |||||||||||||||||||
| Pension and Post Retirement Plans: | |||||||||||||||||||||||
| Increase in Prior Service Cost and Unrecognized Loss | ( | ||||||||||||||||||||||
| Amortization of Prior Service Cost and Unrecognized Gain Included in Net Periodic Pension Cost | ( | ( | ( | ( | |||||||||||||||||||
| Other Comprehensive Income (Loss) | ( | ||||||||||||||||||||||
| Comprehensive Income | |||||||||||||||||||||||
| Less: Comprehensive Income Attributable to Noncontrolling Interests | |||||||||||||||||||||||
| Comprehensive Income Attributable to Regal Rexnord Corporation | $ | $ | $ | $ | |||||||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements
6
REGAL REXNORD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Millions, Except Per Share Data)
| June 30, 2026 | December 31, 2025 | |||||||||||||
| ASSETS | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash and Cash Equivalents | $ | $ | ||||||||||||
Trade Receivables, Less Allowances of $ | ||||||||||||||
| Inventories | ||||||||||||||
| Prepaid Expenses and Other Current Assets | ||||||||||||||
| Total Current Assets | ||||||||||||||
| Net Property, Plant and Equipment | ||||||||||||||
| Operating Lease Assets | ||||||||||||||
| Goodwill | ||||||||||||||
| Intangible Assets, Net of Amortization | ||||||||||||||
| Deferred Income Tax Benefits | ||||||||||||||
| Other Noncurrent Assets | ||||||||||||||
| Total Assets | $ | $ | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current Liabilities: | ||||||||||||||
| Accounts Payable | $ | $ | ||||||||||||
| Dividends Payable | ||||||||||||||
| Accrued Compensation and Benefits | ||||||||||||||
| Accrued Interest | ||||||||||||||
| Other Accrued Expenses | ||||||||||||||
| Current Operating Lease Liabilities | ||||||||||||||
| Current Maturities of Long-Term Debt | ||||||||||||||
| Total Current Liabilities | ||||||||||||||
| Long-Term Debt | ||||||||||||||
| Deferred Income Taxes | ||||||||||||||
| Pension and Other Post Retirement Benefits | ||||||||||||||
| Noncurrent Operating Lease Liabilities | ||||||||||||||
| Other Noncurrent Liabilities | ||||||||||||||
| Equity: | ||||||||||||||
| Regal Rexnord Corporation Shareholders' Equity: | ||||||||||||||
Common Stock, $ | ||||||||||||||
| Additional Paid-In Capital | ||||||||||||||
| Retained Earnings | ||||||||||||||
| Accumulated Other Comprehensive Loss | ( | ( | ||||||||||||
| Total Regal Rexnord Corporation Shareholders' Equity | ||||||||||||||
| Noncontrolling Interests | ||||||||||||||
| Total Equity | ||||||||||||||
| Total Liabilities and Equity | $ | $ | ||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements
7
REGAL REXNORD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(Dollars in Millions, Except Per Share Data)
| Three Months Ended | |||||||||||||||||||||||||||||||||||
Common Stock $ | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||
| March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net Income | — | — | — | ||||||||||||||||||||||||||||||||
| Other Comprehensive Income | — | — | — | ||||||||||||||||||||||||||||||||
Dividends Declared ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Common Stock Issued For The Exercise of Share-Based Compensation Awards | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Share-Based Compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Dividends Declared to Noncontrolling Interests | ( | ( | |||||||||||||||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net Income | — | — | — | ||||||||||||||||||||||||||||||||
| Other Comprehensive Income | — | — | — | ||||||||||||||||||||||||||||||||
Dividends Declared ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Common Stock Issued For The Exercise of Share-Based Compensation Awards | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Share-Based Compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements
8
REGAL REXNORD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(Dollars in Millions, Except Per Share Data)
| Six Months Ended | |||||||||||||||||||||||||||||||||||
Common Stock $ | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||
| December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net Income | — | — | — | ||||||||||||||||||||||||||||||||
| Other Comprehensive (Loss) Income | — | — | — | ( | ( | ||||||||||||||||||||||||||||||
Dividends Declared ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Common Stock Issued For The Exercise of Share-Based Compensation Awards | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Share-Based Compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Dividends Declared to Noncontrolling Interests | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net Income | — | — | — | ||||||||||||||||||||||||||||||||
| Other Comprehensive Income | — | — | — | ||||||||||||||||||||||||||||||||
Dividends Declared ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Common Stock Issued For The Exercise of Share-Based Compensation Awards | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Share-Based Compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements
9
REGAL REXNORD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Millions)
| Six Months Ended | |||||||||||
| June 30, 2026 | June 30, 2025 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net Income | $ | $ | |||||||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities (Net of Acquisitions and Divestitures): | |||||||||||
| Depreciation | |||||||||||
| Amortization | |||||||||||
| Noncash Lease Expense | |||||||||||
| Share-Based Compensation Expense | |||||||||||
| Financing Fee Expense | |||||||||||
| Loss (Gain) on Sale of Assets | ( | ||||||||||
| Benefit from Deferred Income Taxes | ( | ( | |||||||||
| Other Non-Cash Changes | ( | ||||||||||
| Change in Operating Assets and Liabilities, Net of Acquisitions and Divestitures | |||||||||||
| Receivables | ( | ||||||||||
| Inventories | ( | ( | |||||||||
| Accounts Payable | |||||||||||
| Other Assets and Liabilities | ( | ( | |||||||||
| Net Cash Provided by Operating Activities | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Additions to Property, Plant and Equipment | ( | ( | |||||||||
| Proceeds Received from Sales of Property, Plant and Equipment | |||||||||||
| Proceeds Received from Sale of Businesses, Net of Cash Transferred | |||||||||||
| Net Cash Used in Investing Activities | ( | ( | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Borrowings Under Revolving Credit Facility | |||||||||||
| Repayments Under Revolving Credit Facility | ( | ( | |||||||||
| Proceeds from Long-Term Borrowings | |||||||||||
| Repayments of Long-Term Borrowings | ( | ( | |||||||||
| Dividends Paid to Shareholders | ( | ( | |||||||||
| Shares Surrendered for Taxes | ( | ( | |||||||||
| Proceeds from the Exercise of Stock Options | |||||||||||
| Net Cash Used in Financing Activities | ( | ( | |||||||||
| EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | |||||||||||
| Net Decrease in Cash and Cash Equivalents | ( | ( | |||||||||
| Cash and Cash Equivalents at Beginning of Period | |||||||||||
| Cash and Cash Equivalents at End of Period | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||||||
| Cash Paid For: | |||||||||||
| Interest | $ | $ | |||||||||
| Income Taxes | $ | $ | |||||||||
| Noncash Transaction: | |||||||||||
| Right-of-use asset recognized during the period in exchange for finance lease obligation | $ | $ | |||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements
10
REGAL REXNORD CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)
(Dollars in Millions Except Per Share Data, Unless Otherwise Noted)
1. BASIS OF PRESENTATION
The accompanying (a) Condensed Consolidated Balance Sheet of Regal Rexnord Corporation (the “Company”), as of December 31, 2025, which has been derived from audited Consolidated Financial Statements, and (b) unaudited interim Condensed Consolidated Financial Statements as of June 30, 2026 and for the three and six months ended June 30, 2026 and June 30, 2025, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in the Company’s 2025 Annual Report on Form 10-K filed with the SEC on February 20, 2026.
In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Except as otherwise discussed, such adjustments consist of only those of a normal recurring nature. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2026.
2. OTHER FINANCIAL INFORMATION
Revenue Recognition
The Company recognizes revenue from the sale of premium-efficiency electric motors and air moving subsystems, highly engineered industrial power transmission components and subsystems, and a portfolio of discrete automation products that include controls, actuators, drives, and high-precision servo motors. The Company recognizes revenue when control of the product passes to the customer or the service is provided. Revenue is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services.
Nature of Performance Obligations
For performance obligations related to substantially all of the Company's product sales, the Company determines that the customer obtains control upon shipment and recognizes revenue accordingly. Once a product has shipped, the customer is able to direct the use of and obtain substantially all of the remaining benefits from the asset. The Company considers control to have transferred upon shipment because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset, and the customer has significant risks and rewards of ownership of the asset.
For certain contracts, the Company transfers control and recognizes revenue over time. The Company generally recognizes revenue over time on contracts for which the Company is creating an asset with no alternative use and has an enforceable right to payment for performance completed to date. The Company satisfies its performance obligations over time and uses a cost-based input method to measure progress. In applying the cost-based method of revenue recognition, the Company uses actual costs incurred to date relative to the total estimated costs for the contract in conjunction with the customer's commitment to perform in determining the amount of revenue to recognize. The Company has determined that the cost-based input method best depicts the transfer of control of goods or services to the customer.
11
The following table presents contract assets and contract liabilities as of June 30, 2026 and December 31, 2025:
| Current Contract Assets | Noncurrent Contract Assets | Current Contract Liabilities | ||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | |||||||||||||||||
| Balance as of December 31, 2025 | ||||||||||||||||||||
For the six months ended June 30, 2026, the company recognized revenue of $23.9 million from contract liabilities which existed as of December 31, 2025. Contract assets and contract liabilities were not material as of June 30, 2025 and December 31, 2024.
Transaction Price Allocated to Remaining Performance Obligations
As of June 30, 2026, we estimated that approximately $884.0 million in revenue is expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied), with 11.9 % expected to be recognized in the remainder of 2026, 71.4 % in 2027, and 16.7 % thereafter. These amounts exclude revenue allocated to remaining performance obligations for contracts with original terms of 12 months or less.
Disaggregation of Revenue
The following tables presents the Company’s revenues disaggregated by geographical region:
| Three Months Ended | ||||||||||||||||||||||||||
| June 30, 2026 | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total | ||||||||||||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||||||||||||
| Asia | ||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||
| Rest-of-World | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| June 30, 2025 | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total | ||||||||||||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||||||||||||
| Asia | ||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||
| Rest-of-World | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
12
| Six Months Ended | ||||||||||||||||||||||||||
| June 30, 2026 | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total | ||||||||||||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||||||||||||
| Asia | ||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||
| Rest-of-World | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Six Months Ended | ||||||||||||||||||||||||||
| June 30, 2025 | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total | ||||||||||||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||||||||||||
| Asia | ||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||
| Rest-of-World | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
Inventories
The following table presents approximate percentage distribution between major classes of inventories:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Raw Material and Work in Process | |||||||||||
| Finished Goods and Purchased Parts | |||||||||||
13
Property, Plant, and Equipment
The following table presents property, plant, and equipment by major classification:
| Useful Life in Years | June 30, 2026 | December 31, 2025 | |||||||||||||||
| Land and Improvements | $ | $ | |||||||||||||||
| Buildings and Improvements | |||||||||||||||||
| Machinery and Equipment | |||||||||||||||||
| Property, Plant and Equipment | |||||||||||||||||
| Less: Accumulated Depreciation | ( | ( | |||||||||||||||
| Net Property, Plant and Equipment | $ | $ | |||||||||||||||
As of June 30, 2026 and December 31, 2025, $66.1 million and $66.7 million of right-of-use assets arising from finance leases were included in Net Property, Plant and Equipment, respectively.
Supplier Finance Program
The Company's supplier finance program with Bank of America (the "Bank") offers the Company's designated suppliers the option to receive payments of outstanding invoices in advance of the invoice maturity dates at a discount. The Company's payment obligation to the Bank remains subject to the respective supplier's invoice maturity date. The Bank acts as a payment agent, making payments on invoices the Company confirms are valid. The supplier finance program is offered for open account transactions only and may be terminated by either the Company or the Bank upon 15 days notice. The Company has not pledged any assets under this program. The Company has not incurred any subscription, service or other fees related to the Company's supplier finance program. The Company's outstanding obligations under the supplier finance program, which are classified within Accounts Payable, were $49.8 million and $42.0 million as of June 30, 2026 and December 31, 2025, respectively.
Tariffs
On February 20, 2026, the US Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were not authorized by the statute. The Company is the importer of record for certain raw materials and products that were previously subject to such tariffs under IEEPA.
14
3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments, unrealized gains and losses on derivative instruments designated as hedges and pension and post retirement liability adjustments are included in Accumulated Other Comprehensive Income (Loss) ("AOCI"), a component of Total Equity.
The following tables present changes in AOCI by component for the three and six months ended June 30, 2026 and June 30, 2025:
| Three Months Ended | ||||||||||||||||||||||||||
| June 30, 2026 | Hedging Activities | Pension and Post Retirement Benefit Adjustments | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||||||
| Beginning Balance | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
| Other Comprehensive Income (Loss) before Reclassifications | ||||||||||||||||||||||||||
| Gain Reclassified from AOCI | ( | ( | ( | |||||||||||||||||||||||
| Tax Impact | ( | ( | ||||||||||||||||||||||||
| Net Current Period Other Comprehensive Income (Loss) | ( | |||||||||||||||||||||||||
| Ending Balance | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
| June 30, 2025 | Hedging Activities | Pension and Post Retirement Benefit Adjustments | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||||||
| Beginning Balance | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
| Other Comprehensive Income (Loss) before Reclassifications | ||||||||||||||||||||||||||
| Gain Reclassified from AOCI | ( | ( | ( | |||||||||||||||||||||||
| Tax Impact | ( | ( | ||||||||||||||||||||||||
| Net Current Period Other Comprehensive Income (Loss) | ( | |||||||||||||||||||||||||
| Ending Balance | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
15
| Six Months Ended | ||||||||||||||||||||||||||
| June 30, 2026 | Hedging Activities | Pension and Post Retirement Benefit Adjustments | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||||||
| Beginning Balance | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
| Other Comprehensive Income (Loss) before Reclassifications | ( | ( | ||||||||||||||||||||||||
| Gain Reclassified from AOCI | ( | ( | ( | |||||||||||||||||||||||
| Tax Impact | ( | ( | ||||||||||||||||||||||||
| Net Current Period Other Comprehensive Income (Loss) | ( | ( | ( | |||||||||||||||||||||||
| Ending Balance | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
| June 30, 2025 | Hedging Activities | Pension and Post Retirement Benefit Adjustments | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||||||
| Beginning Balance | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Other Comprehensive Income (Loss) before Reclassifications | ( | |||||||||||||||||||||||||
| Gain Reclassified from AOCI | ( | ( | ( | |||||||||||||||||||||||
| Tax Impact | ( | ( | ||||||||||||||||||||||||
| Net Current Period Other Comprehensive Income (Loss) | ( | |||||||||||||||||||||||||
| Ending Balance | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
The Condensed Consolidated Statements of Income line items affected by the hedging activities reclassified from AOCI in the tables above are disclosed in Note 13 - Derivative Financial Instruments.
The reclassification amounts for pension adjustments in the tables above are part of net periodic benefit costs recorded in Other Expense, Net (see also Note 8 - Retirement Plans).
4. GOODWILL AND INTANGIBLE ASSETS
Goodwill
As required, the Company performs an annual impairment test of goodwill as of the end of October, or more frequently if events or circumstances change that would more likely than not reduce the fair value of its reporting units below their carrying value.
16
The following table presents changes to goodwill during the six months ended June 30, 2026:
| Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total | |||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Translation Adjustments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Cumulative Goodwill Impairment Charges | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Intangible Assets
Intangible assets consist of the following:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Weighted Average Amortization Period (Years) | Gross Value | Accumulated Amortization | Net Carrying Amount | Gross Value | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||||
| Customer Relationships | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Technology | |||||||||||||||||||||||||||||||||||||||||
| Trademarks | |||||||||||||||||||||||||||||||||||||||||
| Total Intangibles | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
5. SEGMENT INFORMATION
The Company's operations are organized and managed based on similar product offerings and end markets in the following three reportable segments: Automation & Motion Control ("AMC"), Industrial Powertrain Solutions ("IPS") and Power Efficiency Solutions ("PES").
The AMC segment designs, produces and services conveyor products, conveying automation subsystems, aerospace components, precision motion control solutions, high-efficiency miniature servo motors, controls, drives and linear actuators, as well as power management products that include automatic transfer switches, paralleling switchgear, and customized modular electric pod solutions ("E-Pods") that comprise relevant power and thermal management content. The segment sells into markets that include discrete factory automation, food and beverage, aerospace, general industrial, medical and data center.
The IPS segment designs, produces and services a broad portfolio of highly-engineered transmission products, including mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes and gear motors, clutches, brakes, and industrial powertrain components and solutions. Increasingly, the segment produces industrial powertrain solutions, which are integrated sub-systems comprised of Regal Rexnord motors plus the critical power transmission components that efficiently transmit motion using power generated by the motor to various industrial applications. The segment serves a broad range of markets that include general industrial, metals and mining, energy, discrete automation and commercial HVAC.
The PES segment designs and produces fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, electronic drives, fans and blowers, as well as integrated air moving subsystems comprised of two or more of these components. The segment's products are used in residential and commercial HVAC, and in a wide range of general commercial applications.
17
The chief operating decision maker ("CODM") of the Company is its chief executive officer. Among other considerations, the CODM evaluates performance and allocates resources based on the segment's income from operations. The Company also regularly provides to the CODM information on adjusted cost of sales and adjusted engineering, selling and administration expenses, which are significant expenses.
The following sets forth certain financial information attributable to the Company's reportable segments for the three and six months ended June 30, 2026 and June 30, 2025:
| Three Months Ended | ||||||||||||||||||||||||||||||||
| June 30, 2026 | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Eliminations | Total | |||||||||||||||||||||||||||
| Total Sales | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Intersegment Sales | ( | — | ||||||||||||||||||||||||||||||
Net Sales(1) | — | |||||||||||||||||||||||||||||||
Adjusted Cost of Sales(2) | ||||||||||||||||||||||||||||||||
Adjusted Engineering, Selling and Administration Expenses(3) | ||||||||||||||||||||||||||||||||
Other Segment Items(4) | ||||||||||||||||||||||||||||||||
| Income from Operations | ||||||||||||||||||||||||||||||||
| Interest Expense | ||||||||||||||||||||||||||||||||
| Interest Income | ( | |||||||||||||||||||||||||||||||
| Other Expense, Net | ||||||||||||||||||||||||||||||||
| Income before Taxes | ||||||||||||||||||||||||||||||||
| Other Supplemental Disclosures | ||||||||||||||||||||||||||||||||
| Amortization | ||||||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||||||
| Capital Expenditures | ||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| June 30, 2025 | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Eliminations | Total | |||||||||||||||||||||||||||
| Total Sales | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Intersegment Sales | ( | — | ||||||||||||||||||||||||||||||
Net Sales(1) | — | |||||||||||||||||||||||||||||||
Adjusted Cost of Sales(2) | ||||||||||||||||||||||||||||||||
Adjusted Engineering, Selling and Administration Expenses(3) | ||||||||||||||||||||||||||||||||
Other Segment Items(4) | ||||||||||||||||||||||||||||||||
| Income from Operations | ||||||||||||||||||||||||||||||||
| Interest Expense | ||||||||||||||||||||||||||||||||
| Interest Income | ( | |||||||||||||||||||||||||||||||
| Other Expense, Net | ||||||||||||||||||||||||||||||||
| Income before Taxes | ||||||||||||||||||||||||||||||||
| Other Supplemental Disclosures | ||||||||||||||||||||||||||||||||
| Amortization | ||||||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||||||
| Capital Expenditures | ||||||||||||||||||||||||||||||||
18
| Six Months Ended | ||||||||||||||||||||||||||||||||
| June 30, 2026 | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Eliminations | Total | |||||||||||||||||||||||||||
| Total Sales | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Intersegment Sales | ( | — | ||||||||||||||||||||||||||||||
Net Sales(1) | — | |||||||||||||||||||||||||||||||
Adjusted Cost of Sales(2) | ||||||||||||||||||||||||||||||||
Adjusted Engineering, Selling and Administration Expenses(3) | ||||||||||||||||||||||||||||||||
Other Segment Items(4) | ||||||||||||||||||||||||||||||||
| Income from Operations | ||||||||||||||||||||||||||||||||
| Interest Expense | ||||||||||||||||||||||||||||||||
| Interest Income | ( | |||||||||||||||||||||||||||||||
| Other Expense, Net | ||||||||||||||||||||||||||||||||
| Income before Taxes | ||||||||||||||||||||||||||||||||
| Other Supplemental Disclosures | ||||||||||||||||||||||||||||||||
| Amortization | ||||||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||||||
| Capital Expenditures | ||||||||||||||||||||||||||||||||
| Six Months Ended | ||||||||||||||||||||||||||||||||
| June 30, 2025 | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Eliminations | Total | |||||||||||||||||||||||||||
| Total Sales | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Intersegment Sales | ( | — | ||||||||||||||||||||||||||||||
Net Sales(1) | — | |||||||||||||||||||||||||||||||
Adjusted Cost of Sales(2) | ||||||||||||||||||||||||||||||||
Adjusted Engineering, Selling and Administration Expenses(3) | ||||||||||||||||||||||||||||||||
Other Segment Items(4) | ||||||||||||||||||||||||||||||||
| Income from Operations | ||||||||||||||||||||||||||||||||
| Interest Expense | ||||||||||||||||||||||||||||||||
| Interest Income | ( | |||||||||||||||||||||||||||||||
| Other Expense, Net | ||||||||||||||||||||||||||||||||
| Income before Taxes | ||||||||||||||||||||||||||||||||
| Other Supplemental Disclosures | ||||||||||||||||||||||||||||||||
| Amortization | ||||||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||||||
| Capital Expenditures | ||||||||||||||||||||||||||||||||
| (1) | Represents revenues from external customers. | ||||
| (2) | Adjusted Cost of Sales includes costs associated with producing goods for sale, such as materials, labor and overhead costs, and intercompany cost of sales. Adjusted Cost of Sales differs from Cost of Sales reported under US GAAP primarily because it includes intercompany cost of sales and excludes certain costs, primarily restructuring and related expenses. The difference is included in Other Segment Items. | ||||
| (3) | Adjusted Engineering, Selling and Administration Expenses includes operating expenses such as engineering, selling and administration expenses, as well as hedging, foreign currency gains and losses and certain overhead expenses. Adjusted Engineering, Selling and Administration Expenses differs from Operating Expenses reported under US GAAP primarily because it excludes costs such as significant noncash items, restructuring and related costs, and transaction and integration related costs. The difference is included in Other Segment Items. | ||||
| (4) | Other Segment Items includes other significant noncash items, intangible amortization, as well as restructuring and related costs, transaction and integration related costs, certain overhead expenses and the elimination of intercompany cost of sales. | ||||
19
The following table presents identifiable assets information attributable to the Company's operating segments as of June 30, 2026 and December 31, 2025:
| Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total | |||||||||||||||||||||||
| Identifiable Assets as of June 30, 2026 | $ | $ | $ | $ | ||||||||||||||||||||||
| Identifiable Assets as of December 31, 2025 | ||||||||||||||||||||||||||
6. RECEIVABLES SECURITIZATION
On June 30, 2025, Regal Rexnord Receivables Finance LLC, a bankruptcy remote special purpose entity formed as a wholly-owned subsidiary of the Company (“SPE”), entered into a one-year $400.0 million accounts receivable securitization facility (the “Securitization Facility”) with PNC Bank National Association, Wells Fargo Bank, N.A., and Truist Bank (the “Purchasers”). On June 29, 2026, the SPE and the Purchasers renewed the Securitization Facility for eighteen months with an increased facility capacity of $430.0 million. Under the Securitization Facility, certain US subsidiaries of the Company (the “Originators”) transfer their accounts receivable (the “Receivables”) to the SPE, who in turn sells certain of the Receivables (the “Sold Receivables”) to the Purchasers. The Originators service the Receivables on behalf of the Purchasers but have no continuing involvement with the Sold Receivables.
Transfers of the Sold Receivables from the SPE to the Purchasers are accounted for as a sale of financial assets, resulting in derecognition of the Sold Receivables from the Company’s Condensed Consolidated Financial Statements. These sales are priced at the face value of the Sold Receivables less a fair market value discount, resulting in a loss on the Sold Receivables recorded in Operating Expenses in the Condensed Consolidated Statement of Income. The Sold Receivables are no longer available to satisfy creditors of any Originator in the event of bankruptcy. The SPE also retains certain Receivables as collateral to the Purchasers as a guarantee of cash collections on the Sold Receivables (the “Collateral”), which is recorded in Trade Receivables, Less Allowances in the Condensed Consolidated Balance Sheet.
The Securitization Facility is structured on a revolving basis under which the Purchasers reinvest the cash collections in the Securitization Facility and purchase additional Receivables.
The total outstanding balance of accounts receivable sold from the SPE to the Purchasers under the Securitization Facility and derecognized from the Condensed Consolidated Balance Sheet was $373.6 million and $372.5 million as of June 30, 2026 and December 31, 2025, respectively.
Under the Securitization Facility, the Company sold accounts receivable of $1,185.5 million and $368.5 million for the six months ended June 30, 2026 and June 30, 2025, respectively. Cash collections on the receivables sold for the six months ended June 30, 2026 and June 30, 2025 were $1,184.4 million and $0.0 million, respectively. Cash collections on receivables sold are reflected in Net Cash Provided by Operating Activities in the Condensed Consolidated Statement of Cash Flows.
As of June 30, 2026 and December 31, 2025, unsold accounts receivable of $66.9 million and $64.6 million, respectively, were pledged by the SPE as collateral to the Purchasers.
20
7. DEBT AND BANK CREDIT FACILITIES
The Company’s indebtedness as of June 30, 2026 and December 31, 2025 was as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
| Senior Notes | $ | $ | |||||||||||||||
| 2025 Term Facility | |||||||||||||||||
| 2025 Revolving Facility | |||||||||||||||||
| Altra Notes | |||||||||||||||||
| Finance Leases | |||||||||||||||||
| Other | |||||||||||||||||
| Less: Debt Issuance Costs | ( | ( | |||||||||||||||
| Total | |||||||||||||||||
| Less: Current Maturities | |||||||||||||||||
| Long-Term Debt | $ | $ | |||||||||||||||
The below discussion of the Company’s indebtedness should be read in conjunction with the Note 7 – Debt and Bank Credit Facilities in the Company’s 2025 Annual Report on Form 10-K filed on February 20, 2026.
Senior Notes
On January 24, 2023, the Company issued $1,100.0 million aggregate principal amount of its 6.05 % senior notes due 2026 (the “2026 Senior Notes”), $1,250.0 million aggregate principal amount of its 6.05 % senior notes due 2028 (the “2028 Senior Notes”), $1,100.0 million aggregate principal amount of its 6.30 % senior notes due 2030 (the “2030 Senior Notes”) and $1,250.0 million aggregate principal amount of its 6.40 % senior notes due 2033 (the “2033 Senior Notes” and, together with the 2026 Senior Notes, 2028 Senior Notes and 2030 Senior Notes, collectively, the “Senior Notes”). The 2026 Senior Notes matured on February 15, 2026 and were refinanced with the proceeds from the 2025 Term Facility. The 2028 Senior Notes are scheduled to mature on April 15, 2028, the 2030 Senior Notes are scheduled to mature on February 15, 2030, and the 2033 Senior Notes are scheduled to mature on April 15, 2033.
The rate of interest on each series of the Senior Notes is subject to an increase of up to 2.00 % in the event of certain downgrades in the debt rating of the Senior Notes. Interest on the 2030 Senior Notes is payable semi-annually on February 15 and August 15 of each year, beginning on August 15, 2023. Interest on the 2028 Senior Notes and the 2033 Senior Notes is payable semi-annually on April 15 and October 15 of each year, beginning on April 15, 2023.
In May 2024, the Company exchanged the Senior Notes with registered notes with terms substantially identical to those of the Senior Notes of the corresponding series (the “New Notes”). The Company exchanged approximately $4,697.1 million in aggregate principal amount of Senior Notes for approximately $4,697.1 million in aggregate principal amount of New Notes of the corresponding series. The aggregate principal amount of Senior Notes not exchanged, approximately $2.9 million, remained outstanding across the four series of Senior Notes. The New Notes consisted of approximately $1,099.0 million aggregate principal amount of 6.05 % senior notes that matured on February 15, 2026, $1,249.4 million aggregate principal amount of 6.05 % senior notes due 2028, $1,099.4 million aggregate principal amount of 6.30 % senior notes due 2030 and $1,249.3 million aggregate principal amount of 6.40 % senior notes due 2033. The Senior Notes are guaranteed by certain subsidiaries of the Company.
The fair value of the Senior Notes is based on rates for instruments with comparable maturities and credit quality, which is considered a Level 2 fair value measurement (see also Note 14 - Fair Value). The approximate fair value of the Senior Notes was $3,752.1 million and $4,903.4 million as of June 30, 2026 and December 31, 2025, respectively, compared to a carrying value of $3,600.0 million and $4,700.0 million as of June 30, 2026 and December 31, 2025, respectively. The Company believes that the fair value of all other debt instruments approximates their carrying value.
21
Credit Agreement
On March 28, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the “2022 Credit Agreement”), which was subsequently amended on November 17, 2022 and November 30, 2022. The Credit Agreement provided for an unsecured term loan facility of $1,390.0 million (the "Term Facility") and an unsecured revolving loan of $1,570.0 million (the "Multicurrency Revolving Facility"). The Company repaid the outstanding Term Loan amount of $665.0 million in 2025.
On November 21, 2025, Regal Rexnord Corporation entered into a Third Amended and Restated Credit Agreement (the “2025 Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders named therein. The 2025 Credit Agreement amends and restates in its entirety the 2022 Credit Agreement and consists of the following:
i.an unsecured Delayed Draw Term Loan in an aggregate principal amount of up to $850.0 million, maturing on February 21, 2029 (“2025 Term Facility”) and,
ii.an unsecured revolving line of credit in Dollars or various other currencies in an aggregate principal amount of up to $1,500.0 million, maturing on November 21, 2030 (“2025 Revolving Facility”).
The Company borrowed $850.0 million under the 2025 Term Facility on February 12, 2026 and used the proceeds to refinance the 2026 Senior Notes.
Per the terms of the 2025 Credit Agreement, prepayments can be made without penalty. Borrowings under the 2025 Credit Agreement bear interest at floating rates based upon indices determined by the currency of the borrowing (SOFR or an alternative base rate for US Dollar borrowings) or at an alternative base rate, in each case, plus an applicable margin.
As of June 30, 2026 the Company had no standby letters of credit issued under the 2025 Revolving Facility and $1,427.5 million of available borrowing capacity. The average daily balance in borrowings under the 2025 Revolving Facility was $238.1 million and $187.1 million for the three and six months ended June 30, 2026, respectively. The average daily balance in borrowings under the Multicurrency Revolving Facility was $101.1 million and $91.3 million for the three and six months ended June 30, 2025, respectively. The Company paid a non-use fee of 0.15 % as of June 30, 2026 on the aggregate unused amount of the 2025 Revolving Facility at a rate determined by reference to its consolidated funded debt to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) ratio.
Weighted average interest rates are as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||
| 2025 Term Facility | % | % | |||||||||||||||||||||
| Term Facility | % | % | |||||||||||||||||||||
| 2025 Revolving Facility | % | % | |||||||||||||||||||||
| Multicurrency Revolving Facility | % | % | |||||||||||||||||||||
Altra Notes
On March 27, 2023, in connection with the Altra Transaction, the Company assumed $18.1 million aggregate principal amount of 6.125 % senior notes due in 2026 (the “Altra Notes”).
The Altra Notes will mature on October 1, 2026 and are presented in Current Maturities of Long-Term Debt in the Condensed Consolidated Balance Sheets. The Altra Notes may be redeemed at the option of the Company on or after October 1, 2023. The Altra Notes are guaranteed on a senior unsecured basis by certain of the Company's domestic subsidiaries.
Compliance with Financial Covenants
The 2025 Credit Agreement requires the Company to meet specified financial ratios and to satisfy certain financial condition tests. The Company was in compliance with all financial covenants as of June 30, 2026.
22
Finance Leases
8. RETIREMENT PLANS
The following table presents the Company’s net periodic benefit cost (income) components of its defined benefit plans:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||
| Service Cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest Cost | |||||||||||||||||||||||
| Expected Return on Plan Assets | ( | ( | ( | ( | |||||||||||||||||||
| Amortization of Prior Service Cost and Net Actuarial Loss | ( | ( | ( | ( | |||||||||||||||||||
| Net Periodic Benefit Expense | $ | $ | $ | $ | |||||||||||||||||||
The service cost component is included in Cost of Sales and Operating Expenses. All other components of net periodic benefit costs are included in Other Expense, Net on the Company's Condensed Consolidated Statements of Income.
For the three months ended June 30, 2026 and June 30, 2025, the Company contributed $3.0 million and $2.0 million, respectively, to its defined benefit pension plans. For the six months ended June 30, 2026 and June 30, 2025, the Company contributed $5.5 million and $7.1 million, respectively. The Company expects to make total contributions of $18.7 million in 2026. The Company contributed a total of $15.5 million in 2025.
For the three months ended June 30, 2026 and June 30, 2025, the Company contributed $6.4 million and $5.5 million, respectively, to defined contribution plans. For the six months ended June 30, 2026 and June 30, 2025, the Company contributed $19.6 million and $12.8 million, respectively.
9. SHAREHOLDERS’ EQUITY
Share-Based Compensation
Performance share unit awards ("PSUs") consist of the right to shares of the Company's stock awarded to associates of the Company. PSUs vest upon the Board of Director's approval of PSU metric achievement, generally in the first quarter after the conclusion of the three-year overall performance period. PSUs are granted at performance target of 100 %.
For the six months ended June 30, 2026, the Company issued 42,568 Performance Share Units ("2026 PSUs"). The 2026 PSUs include two performance metrics: Return on Invested Capital weighted at 75 % and Revenue Growth weighted at 25 %. The payout for each performance metric ranges from 0 % to 200 %. The 2026 PSUs also include a 20 % modifier (increase or decrease) based on relative Total Shareholder Return (“rTSR”) as compared to the S&P 900 Industrials index, which allows for up to a maximum 240 % total payout. The 2026 PSUs are valued using a Monte Carlo simulation model as of the grant date. As set forth in the individual grant agreements, acceleration of vesting may occur under a change in control, death or disability. There are no voting rights with these instruments until vesting occurs and a share of stock is issued.
The Company recognized approximately $2.3 million and $10.3 million in share-based compensation expense for the three months ended June 30, 2026 and June 30, 2025, respectively, and approximately $10.4 million and $19.8 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The total income tax benefit recognized in the Condensed Consolidated Statements of Income for share-based compensation expense was $0.0 million and $1.6 million for the three months ended June 30, 2026 and June 30, 2025, respectively, and $5.3 million and $2.7 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The Company recognizes compensation expense on grants of share-based compensation awards on a straight-line basis over the vesting period of each award.
23
During the six months ended June 30, 2026, the Company granted the following share-based incentive awards:
| Award Type | Number of Awards | Weighted Average Grant-Date Fair Value | ||||||||||||
| Restricted Stock Units | $ | |||||||||||||
| Performance Share Units | $ | |||||||||||||
10. INCOME TAXES
The effective tax rate for the three months ended June 30, 2026 was 18.7 % versus 21.3 % for the three months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 was lower than the same period in 2025 primarily due to changes in the amount and mix of pre-tax earnings, the relative impact of permanent and discrete tax items, and benefits from tax planning strategies. The effective tax rate for the six months ended June 30, 2026 and June 30, 2025 was 17.7 % and 21.3 %, respectively. The effective tax rate for the six months ended June 30, 2026 was lower than the same periods in 2025 primarily due to a discrete tax benefit related to stock option exercises in the current year, changes in the amount and mix of pre-tax earnings, the relative impact of permanent and discrete tax items, and benefits from tax planning strategies.
As of June 30, 2026 and December 31, 2025, the Company had approximately $4.4 million and $4.2 million, respectively, of unrecognized tax benefits, all of which would impact the effective income tax rate if recognized.
The Company recognizes interest and penalties related to unrecognized tax benefits in Provision for Income Taxes in the Condensed Consolidated Statements of Income. The Company had $0.5 million and $0.5 million of accrued interest as of June 30, 2026 and December 31, 2025, respectively.
The Company conducts business globally and, as a result, files income tax returns in the US federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The US Internal Revenue Service is currently conducting an audit of the Company's 2022 income tax return. No material deficiencies have been assessed related to ongoing audits as of June 30, 2026.
11. EARNINGS PER SHARE
Diluted earnings per share is calculated based upon earnings applicable to common shares divided by the weighted-average number of common shares outstanding during the period adjusted for the effect of other dilutive securities. The amount of the anti-dilutive shares was 0.0 million and 0.4 million for the three months ended June 30, 2026 and June 30, 2025, respectively. The amount of the anti-dilutive shares was 0.1 million and 0.4 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The following table reconciles the basic and diluted shares used in earn ings per share calculations for the three and six months ended June 30, 2026 and June 30, 2025:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||
| Denominator for Basic Earnings Per Share | |||||||||||||||||||||||
| Effect of Dilutive Securities | |||||||||||||||||||||||
| Denominator for Diluted Earnings Per Share | |||||||||||||||||||||||
12. CONTINGENCIES
The Company is party to litigation and other legal or regulatory proceedings that arise in the normal course of the Company's business operations, the outcomes of which are subject to significant uncertainty, including product warranty and liability claims, contract disputes and environmental, asbestos, intellectual property, employment and other matters. The Company’s products are used in a variety of industrial, commercial and residential applications that subject the Company to claims that the use of its products is alleged to have resulted in injury, death or other damage. Many of these matters will only be resolved when one or more future events occur or fail to occur. Management conducts regular reviews, including updates from legal counsel, to assess the need for accounting recognition or disclosure of these contingencies, and such assessment inherently involves an exercise in judgment. The Company accrues for exposures to the extent that losses are deemed probable and are reasonably estimable. The Company does not currently believe that the outcome of any of these proceedings individually or collectively will have a material effect on the Company's financial position, results of operations or its cash flows.
24
The Company is subject to federal, state and local environmental protection laws and regulations with respect to our business operations and is operating in compliance with, or taking action aimed at helping ensure compliance with, these laws and regulations. The Company’s threshold for disclosing environmental legal proceedings involving a government authority where potential monetary sanctions are involved is $1 million.
The most significant legal proceedings involving the Company are described below.
The Company recognizes the cost associated with its standard warranty on its products at the time of sale. The amount recognized is based on historical experience. The following table presents a reconciliation of the changes in accrued warranty costs for the three and six months ended June 30, 2026 and June 30, 2025:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | ||||||||||||||||||||||
| Less: Payments | ||||||||||||||||||||||||||
| Provisions | ||||||||||||||||||||||||||
| Translation Adjustments | ( | ( | ( | |||||||||||||||||||||||
| Ending Balance | $ | $ | $ | $ | ||||||||||||||||||||||
These liabilities are included in Other Accrued Expenses and Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.
13. DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are commodity price risk, currency exchange risk, and interest rate risk. Forward contracts on certain commodities are entered into to manage the price risk associated with forecasted purchases of materials used in the Company's manufacturing process. Forward contracts on certain currencies are entered into to manage forecasted cash flows in certain foreign currencies. Interest rate swaps have been utilized in prior years to manage interest rate risk associated with the Company's floating rate borrowings. There are no outstanding interest rate swaps as of June 30, 2026.
The Company is exposed to credit losses in the event of non-performance by the counterparties to various financial agreements, including its commodity hedging transactions and foreign currency exchange contracts. Exposure to counterparty credit risk is managed by limiting counterparties to major international banks and financial institutions meeting established credit guidelines and continually monitoring their compliance with the credit guidelines. The Company does not obtain collateral or other security to support financial instruments subject to credit risk. The Company does not anticipate non-performance by its counterparties but cannot provide assurances.
The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets. The Company designates commodity forward contracts as cash flow hedges of forecasted purchases of commodities, currency forward contracts as cash flow hedges of forecasted foreign currency cash flows and interest rate swaps as cash flow hedges of forecasted SOFR-based interest payments. There were no significant collateral deposits on derivative financial instruments as of June 30, 2026 or June 30, 2025.
25
Cash Flow Hedges
The gain or loss on derivatives designated as hedges is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on derivatives not designated as hedges are recognized in current earnings.
As of June 30, 2026 and December 31, 2025, the Company had $8.3 million and $3.8 million, respectively, net of tax, of derivative gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings.
The Company has commodity forward contracts to hedge forecasted purchases of commodities with maturities extending through December 2027. The notional amounts expressed in terms of the dollar value of the hedged item were as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Copper | $ | $ | |||||||||
The Company has currency forward contracts with maturities extending through December 2027. The notional amounts expressed in terms of the dollar value of the hedged currency were as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Euro | $ | $ | |||||||||
| Chinese Renminbi | |||||||||||
| Mexican Peso | |||||||||||
| Canadian Dollar | |||||||||||
| Swedish Krona | |||||||||||
| Indian Rupee | |||||||||||
| Australian Dollar | |||||||||||
| British Pound | |||||||||||
The Company entered into two receive variable/pay-fixed forward starting non-amortizing interest rate swaps in June 2020, with a total notional amount of $250.0 million, which were terminated in March 2022. The cash proceeds of $16.2 million received to settle the terminated swaps were recognized as a reduction of interest expense via the effective interest rate method through June 2025 when the balances under the related Term Facility were repaid. The Company entered into two additional receive variable/pay-fixed forward starting non-amortizing interest rate swaps in May 2022, with a total notional amount of $250.0 million and scheduled expiration in March 2027. These swaps were terminated on June 30, 2025 in connection with the repayment of the related Term Facility, resulting in cash proceeds and a recognized gain of $3.1 million, which was recorded in Interest Expense on the Condensed Consolidated Statements of Income.
26
Fair values of derivative instruments as of June 30, 2026 and December 31, 2025 were:
| June 30, 2026 | |||||||||||||||||||||||
| Prepaid Expenses and Other Current Assets | Other Noncurrent Assets | Other Accrued Expenses | |||||||||||||||||||||
| Designated as Hedging Instruments: | |||||||||||||||||||||||
| Currency Contracts | $ | $ | $ | ||||||||||||||||||||
| Commodity Contracts | |||||||||||||||||||||||
| Not Designated as Hedging Instruments: | |||||||||||||||||||||||
| Currency Contracts | |||||||||||||||||||||||
| Total Derivatives | $ | $ | $ | ||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Prepaid Expenses and Other Current Assets | Other Noncurrent Assets | Other Accrued Expenses | ||||||||||||||||||||||||
| Designated as Hedging Instruments: | ||||||||||||||||||||||||||
| Currency Contracts | $ | $ | $ | |||||||||||||||||||||||
| Commodity Contracts | ||||||||||||||||||||||||||
| Not Designated as Hedging Instruments: | ||||||||||||||||||||||||||
| Currency Contracts | ||||||||||||||||||||||||||
| Total Derivatives | $ | $ | $ | |||||||||||||||||||||||
27
Derivatives Designated as Cash Flow Hedging Instruments
The effect of derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income were:
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commodity Forwards | Currency Forwards | Total | Commodity Forwards | Currency Forwards | Interest Rate Swaps | Total | |||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in Other Comprehensive Income (Loss) | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Amounts Reclassified from Other Comprehensive Income (Loss): | |||||||||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in Cost of Sales | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Gain Recognized in Interest Expense | |||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commodity Forwards | Currency Forwards | Total | Commodity Forwards | Currency Forwards | Interest Rate Swaps | Total | |||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in Other Comprehensive Income (Loss) | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Amounts Reclassified from Other Comprehensive Income (Loss): | |||||||||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in Cost of Sales | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Gain Recognized in Interest Expense | |||||||||||||||||||||||||||||||||||||||||||||||
Derivatives Not Designated as Cash Flow Hedging Instruments
The effect of currency forwards not designated as cash flow hedges on the Condensed Consolidated Statements of Income were:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||||||||||||
| (Loss) Gain Recognized in Operating Expenses | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
The AOCI balance related to hedging activities consists of a $19.8 million gain net of tax as of June 30, 2026 which includes $19.2 million of net current deferred gains expected to be reclassified to the Condensed Consolidated Statement of Comprehensive Income in the next twelve months. There were no gains or losses reclassified from AOCI to earnings based on the probability that the forecasted transaction would not occur.
The Company's commodity and currency derivative contracts are subject to master netting agreements with the respective counterparties which allow the Company to net settle transactions with a single net amount payable by one party to another party. The Company has elected to present the derivative assets and derivative liabilities on the Condensed Consolidated Balance Sheets on a gross basis as of June 30, 2026 and December 31, 2025.
28
The following table presents on a net basis the derivative assets and liabilities that are subject to right of offset under enforceable master netting agreements:
| June 30, 2026 | |||||||||||||||||
| Gross Amounts as Presented on the Condensed Consolidated Balance Sheet | Derivative Contract Amounts Subject to Right of Offset | Derivative Contracts as Presented on a Net Basis | |||||||||||||||
| Assets | $ | $ | ( | $ | |||||||||||||
| Liabilities | ( | ||||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Gross Amounts as Presented on the Condensed Consolidated Balance Sheet | Derivative Contract Amounts Subject to Right of Offset | Derivative Contracts as Presented on a Net Basis | |||||||||||||||
| Assets | $ | $ | ( | $ | |||||||||||||
| Liabilities | ( | ||||||||||||||||
29
14. FAIR VALUE
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:
| Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities | ||||
| Level 2 | Unadjusted quoted prices in active markets for similar assets or liabilities, or | ||||
| Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or | |||||
| Inputs other than quoted prices that are observable for the asset or liability | |||||
| Level 3 | Unobservable inputs for the asset or liability | ||||
The Company uses the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The fair values of cash equivalents and short-term deposits approximate their carrying values as of June 30, 2026 and December 31, 2025, due to the short period of time to maturity and are classified using Level 1 inputs. The fair values of trade receivables and accounts payable approximate the carrying values due to the short period of time to maturity. See Note 7 - Debt and Bank Credit Facilities for disclosure of the approximate fair value of the Company's debt as of June 30, 2026 and December 31, 2025.
The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2026 and December 31, 2025:
| June 30, 2026 | December 31, 2025 | Classification | |||||||||||||||
| Assets: | |||||||||||||||||
| Prepaid Expenses and Other Current Assets: | |||||||||||||||||
| Derivative Currency Contracts | $ | $ | Level 2 | ||||||||||||||
| Derivative Commodity Contracts | Level 2 | ||||||||||||||||
| Other Noncurrent Assets: | |||||||||||||||||
| Assets Held in Rabbi Trust | Level 1 | ||||||||||||||||
| Derivative Currency Contracts | Level 2 | ||||||||||||||||
| Derivative Commodity Contracts | Level 2 | ||||||||||||||||
| Liabilities: | |||||||||||||||||
| Other Accrued Expenses: | |||||||||||||||||
| Derivative Currency Contracts | Level 2 | ||||||||||||||||
| Derivative Commodity Contracts | Level 2 | ||||||||||||||||
Level 1 fair value measurements for assets held in a Rabbi Trust are unadjusted quoted prices.
Level 2 fair value measurements for derivative assets and liabilities are measured using quoted prices in active markets for similar assets and liabilities. Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments. Commodity forwards are valued based on observable market transactions of forward commodity prices. Senior Notes are valued based on rates for instruments with comparable maturities and credit quality. See Note 7 - Debt and Bank Credit Facilities for further information.
30
15. RESTRUCTURING ACTIVITIES
The Company incurred restructuring and restructuring-related costs on projects during the three and six months ended June 30, 2026 and June 30, 2025. The Company has initiated restructuring plans to achieve cost synergies from procurement, distribution efficiencies, footprint rationalization and other general cost savings measures. Restructuring costs include employee termination and plant relocation costs. Restructuring-related costs include costs directly associated with actions resulting from the Company's simplification initiatives, such as asset write-downs or accelerated depreciation due to shortened useful lives in connection with site closures, discretionary employment benefit costs and other facility rationalization costs. Restructuring costs for employee termination expenses are generally recognized when the severance liability is determined to be probable of being paid and reasonably estimable while plant relocation costs and related costs are generally required to be expensed as incurred.
The following table presents a reconciliation of provisions and payments for the restructuring projects for the three and six months ended June 30, 2026 and June 30, 2025:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | |||||||||||||||||||
Provision(1) | |||||||||||||||||||||||
| Less: Payments | |||||||||||||||||||||||
| Ending Balance | $ | $ | $ | $ | |||||||||||||||||||
| (1) | Excludes equipment related write-offs and restructuring related depreciation adjustments. | ||||
The following table is a reconciliation of expenses by type for restructuring projects for the three and six months ended June 30, 2026 and June 30, 2025:
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||||||||||||||
| Cost of Sales | Operating Expenses | Total | Cost of Sales | Operating Expenses | Total | ||||||||||||||||||||||||||||||
| Severance Expense | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Facility Related Costs | |||||||||||||||||||||||||||||||||||
| Other Expenses | ( | ( | |||||||||||||||||||||||||||||||||
| Total Restructuring Costs | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Six Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||||||||||||||
| Cost of Sales | Operating Expenses | Total | Cost of Sales | Operating Expenses | Total | ||||||||||||||||||||||||||||||
| Severance Expense | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Facility Related Costs | |||||||||||||||||||||||||||||||||||
| Other Expenses | ( | ||||||||||||||||||||||||||||||||||
| Total Restructuring Costs | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
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The following table shows the allocation of Restructuring Expenses by segment for the three and six months ended June 30, 2026 and June 30, 2025:
| Three Months Ended | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total | |||||||||||||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Six Months Ended | Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total | |||||||||||||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| June 30, 2025 | |||||||||||||||||||||||||||||||||||
The Company expects to record aggregate future charges related to restructuring of $13.6 million in the remainder of 2026. The Company continues to evaluate operating efficiencies and anticipates incurring additional costs in future periods in connection with these activities.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars In Millions Except Per Share Data, Unless Otherwise Noted)
Overview
Regal Rexnord Corporation (NYSE: RRX) (“we,” “us,” “our” or the “Company”) and its associates around the world help create a better tomorrow by providing sustainable solutions that power, transmit and control motion. The Company’s electric motors and air moving subsystems provide the power to create motion. A portfolio of highly engineered power transmission components and subsystems efficiently transmits motion to power industrial applications. The Company's automation offering, comprised of controllers, drives, precision motors, and actuators, controls motion in applications ranging from factory automation to precision tools used in surgical applications. We are headquartered in Milwaukee, Wisconsin and have manufacturing, sales and service facilities worldwide.
Our Company is comprised of three operating segments: Automation & Motion Control ("AMC"), Industrial Powertrain Solutions ("IPS"), and Power Efficiency Solutions ("PES").
A description of our three operating segments is as follows:
•The AMC segment designs, produces and services conveyor products, conveying automation subsystems, aerospace components, precision motion control solutions, high-efficiency miniature servo motors, controls, drives and linear actuators, as well as power management products that include automatic transfer switches, paralleling switchgear, and customized modular electric pod solutions ("E-Pods") that comprise relevant power and thermal management content. The segment sells into markets that include discrete factory automation, food and beverage, aerospace, general industrial, medical and data center.
•The IPS segment designs, produces and services a broad portfolio of highly-engineered transmission products, including mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes and gear motors, clutches, brakes, and industrial powertrain components and solutions. Increasingly, the segment produces industrial powertrain solutions, which are integrated sub-systems comprised of Regal Rexnord motors plus the critical power transmission components that efficiently transmit motion using power generated by the motor to various industrial applications. The segment serves a broad range of markets that include general industrial, metals and mining, energy, discrete automation and commercial HVAC.
•The PES segment designs and produces fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, electronic drives, fans and blowers, as well as integrated air moving subsystems comprised of two or more of these components. The segment's products are used in residential and commercial HVAC, and in a wide range of general commercial applications.
Components of Profit and Loss
Net Sales. We sell our products to a variety of manufacturers, distributors and end users. Our customers consist of a large cross-section of businesses, ranging from Fortune 100 companies to small businesses. A number of our products are sold to Original Equipment Manufacturers ("OEMs"), who incorporate our products into products they manufacture, and many of our products are built to the requirements of our customers. The majority of our sales are derived from direct sales to customers by sales personnel employed by the Company; however, a significant portion of our sales are derived from sales made by manufacturer’s representatives. Our product sales are made via purchase order, long-term contract, and, in some instances, one-time purchases. Many of our products have broad customer bases, with the levels of concentration of revenue varying from business unit to business unit.
Our level of net sales for any given period is dependent upon a number of factors, including (i) the demand for our products; (ii) the strength of the economy generally and the end markets in which we compete; (iii) our customers’ perceptions of our product quality at any given time; (iv) our ability to meet customer demands in a timely manner; and (v) the selling price of our products. As a result, our total revenue has tended to experience quarterly variations and our total revenue for any particular quarter may not be indicative of future results.
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We use the term “organic sales" to refer to sales from existing operations excluding (i) sales from acquired businesses recorded prior to the first anniversary of an acquisition (“Acquisition Sales”), if any, (ii) sales attributable to any businesses divested/to be exited, and (iii) the impact of foreign currency translation. The impact of foreign currency translation is determined by translating the respective period’s organic sales using the same currency exchange rates that were in effect during the prior year periods. We use the term “organic sales growth” to refer to the increase in our sales between periods that is attributable to organic sales. We use the term “acquisition growth” to refer to the increase in our sales between periods that is attributable to Acquisition Sales. Organic sales, organic sales growth and acquisition growth are non-GAAP financial measures. See reconciliation of these measures to GAAP net sales in the section entitled "Non-GAAP Measures" below.
Gross Profit. Our gross profit is impacted by our levels of net sales and cost of sales. Our cost of sales consists of costs for, among other things (i) raw materials, including copper, steel and aluminum; (ii) components such as castings, bars, tools, bearings and electronics; (iii) wages and related personnel expenses for fabrication, assembly and logistics personnel; (iv) manufacturing facilities, including depreciation on our manufacturing facilities and equipment, insurance and utilities; and (v) shipping. The majority of our cost of sales consists of raw materials and components. The price we pay for commodities and components can be subject to commodity price fluctuations. We attempt to mitigate portions of the commodity price fluctuations through fixed-price agreements with suppliers and our hedging strategies. When we experience commodity price increases, we have tended to announce price increases to our customers, with such increases generally taking effect a period of time after the public announcements. For those sales we make under long-term arrangements, we tend to include material price formulas that specify quarterly or semi-annual price adjustments based on a variety of factors, including commodity prices.
Outside of general economic cyclicality, our business units experience different levels of variation in sales from quarter to quarter based on factors specific to each business. For example, a portion of our PES segment manufactures products that are used in air conditioning applications. As a result, our sales for that business tend to be lower in the first and fourth quarters and higher in the second and third quarters. In contrast, our IPS and AMC segments each have a broad customer base and a variety of applications, thereby helping to mitigate large quarter-to-quarter fluctuations outside of general economic conditions.
Operating Expenses. Our operating expenses consist primarily of (i) general and administrative expenses; (ii) sales and marketing expenses; (iii) general engineering and research and development expenses; and (iv) handling costs incurred in conjunction with distribution activities. Personnel related costs are our largest operating expense.
Our general and administrative expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses related to our executive, finance, human resource, information technology, legal and operations functions; (ii) occupancy expenses; (iii) technology related costs; (iv) depreciation and amortization; and (v) corporate-related travel. The majority of our general and administrative costs are for salaries and related personnel expenses. These costs can vary by business given the location of our different manufacturing operations.
Our sales and marketing expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses related to our sales and marketing function; (ii) internal and external sales commissions and bonuses; (iii) travel, lodging and other out-of-pocket expenses associated with our selling efforts; and (iv) other related overhead.
Our general engineering and research and development expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses; (ii) the design and development of new products and enhancements to existing products; (iii) quality assurance and testing; and (iv) other related overhead. Our research and development efforts tend to be targeted toward developing new products that would allow us to maintain or gain additional market share, whether in new or existing applications. In particular, a large driver of our research and development efforts is to raise the energy efficiency and lower the environmental impact of our products and sub-systems.
Income from Operations. Our income from operations consists of segment gross profit less segment operating expenses. In addition, there are shared operating costs that cover corporate, engineering and IT expenses that are consistently allocated to the operating segments and are included in segment operating expenses. Income from operations is a key metric used to measure year-over-year performance of the segments.
Recent Developments
On July 1, 2026, Aamir Paul succeeded Louis V. Pinkham as the Company’s Chief Executive Officer. The Board of Directors (the “Board”) appointed Mr. Paul to serve on the Board as a director with an initial term continuing until the Company’s 2027 annual meeting of shareholders.
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On February 20, 2026, the US Supreme Court ruled that tariffs imposed under IEEPA were not authorized by the statute. The Company is the importer of record for certain raw materials and products that were previously subject to such tariffs under IEEPA. The Company recorded a $33.0 million pre-tax benefit related to certain IEEPA tariff refunds for the three and six months ended June 30, 2026. There are other IEEPA tariff duties that may be eligible for submission and recovery under future phases of the CAPE refund process, but the ultimate amount and timing of recovery is uncertain at this time. For the year ended December 31, 2026, the Company estimates a pre-tax benefit of $49 million, including $33.0 million recorded for the six months ended June 30, 2026. See Note 2 - Other Financial Information of the Notes to the Condensed Consolidated Financial Statements for more information.
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Results of Operations
Three Months Ended June 30, 2026 Compared to June 30, 2025
| Three Months Ended | ||||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | |||||||||||||||||||||||||
| Amount | Percent of Net Sales | Amount | Percent of Net Sales | |||||||||||||||||||||||
| Net Sales | ||||||||||||||||||||||||||
| Automation & Motion Control | $ | 477.7 | $ | 411.1 | ||||||||||||||||||||||
| Industrial Powertrain Solutions | 669.4 | 649.8 | ||||||||||||||||||||||||
| Power Efficiency Solutions | 411.3 | 435.2 | ||||||||||||||||||||||||
| Consolidated | $ | 1,558.4 | $ | 1,496.1 | ||||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||||||||
| Automation & Motion Control | $ | 183.3 | 38.4 | % | $ | 154.6 | 37.6 | % | ||||||||||||||||||
| Industrial Powertrain Solutions | 286.9 | 42.9 | % | 280.4 | 43.2 | % | ||||||||||||||||||||
| Power Efficiency Solutions | 141.4 | 34.4 | % | 129.7 | 29.8 | % | ||||||||||||||||||||
| Consolidated | $ | 611.6 | 39.2 | % | $ | 564.7 | 37.7 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Automation & Motion Control | $ | 134.8 | 28.2 | % | $ | 124.2 | 30.2 | % | ||||||||||||||||||
| Industrial Powertrain Solutions | 189.3 | 28.3 | % | 188.0 | 28.9 | % | ||||||||||||||||||||
| Power Efficiency Solutions | 72.3 | 17.6 | % | 70.2 | 16.1 | % | ||||||||||||||||||||
| Consolidated | $ | 396.4 | 25.4 | % | $ | 382.4 | 25.6 | % | ||||||||||||||||||
| Income from Operations | ||||||||||||||||||||||||||
| Automation & Motion Control | $ | 48.5 | 10.2 | % | $ | 30.4 | 7.4 | % | ||||||||||||||||||
| Industrial Powertrain Solutions | 97.6 | 14.6 | % | 92.4 | 14.2 | % | ||||||||||||||||||||
| Power Efficiency Solutions | 69.1 | 16.8 | % | 59.5 | 13.7 | % | ||||||||||||||||||||
| Consolidated | $ | 215.2 | 13.8 | % | $ | 182.3 | 12.2 | % | ||||||||||||||||||
| Interest Expense | $ | 77.4 | $ | 85.3 | ||||||||||||||||||||||
| Interest Income | (6.2) | (5.1) | ||||||||||||||||||||||||
| Other Expense, Net | 0.3 | 0.9 | ||||||||||||||||||||||||
| Income before Taxes | 143.7 | 101.2 | ||||||||||||||||||||||||
| Provision for Income Taxes | 26.9 | 21.6 | ||||||||||||||||||||||||
| Net Income | 116.8 | 79.6 | ||||||||||||||||||||||||
| Less: Net Income Attributable to Noncontrolling Interests | 0.2 | 0.4 | ||||||||||||||||||||||||
| Net Income Attributable to Regal Rexnord Corporation | $ | 116.6 | $ | 79.2 | ||||||||||||||||||||||
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Net sales for the second quarter 2026 were $1,558.4 million, an increase of $62.3 million, or 4.2%, compared to the second quarter 2025. The increase consisted of an organic sales increase of 3.3% and a positive foreign currency translation impact of 1.0%. The increase in organic sales of $48.5 million was driven by a $64.2 million increase within AMC and a $13.0 million increase within IPS, partially offset by a $28.7 million decrease in organic sales within PES. Gross profit for the second quarter 2026 was $611.6 million, an increase of $46.9 million, or 8.3%, compared to the second quarter 2025, primarily driven by a benefit from IEEPA tariff refunds of $32.0 million and an increase of $22.8 million (excluding the benefit from IEEPA tariff refunds) at AMC. Total operating expenses for the second quarter 2026 were $396.4 million, an increase of $14.0 million, or 3.7%, as compared to the second quarter 2025, primarily due to an increase of $10.6 million within AMC.
AMC net sales for the second quarter 2026 were $477.7 million, an increase of $66.6 million, or 16.2%, as compared to the second quarter 2025. The increase consisted of an organic sales increase of 15.6% and a positive foreign currency translation impact of 0.6%. The $64.2 million increase in organic sales reflects broad-based growth, but with particular strength in the data center, discrete automation, and aerospace & defense markets. Gross profit for the second quarter of 2026 was $183.3 million, an increase of $28.7 million, or 18.6%, as compared to the second quarter of 2025, primarily driven by higher sales volumes and a benefit from IEEPA tariff refunds of $5.9 million. Total operating expenses for the second quarter of 2026 were $134.8 million, an increase of $10.6 million, or 8.5%, compared to the second quarter of 2025, primarily driven by labor and benefit costs due to inflation and growth investments.
IPS net sales for the second quarter 2026 were $669.4 million, an increase of $19.6 million, or 3.0%, as compared to the second quarter 2025. The increase primarily consisted of an organic sales increase of 2.0% and a positive foreign currency translation impact of 1.1%. The $13.0 million increase in organic sales largely reflects strong growth in the energy market. Gross profit for the second quarter of 2026 was $286.9 million, an increase of $6.5 million, or 2.3%, as compared to the second quarter of 2025, primarily driven by a benefit from IEEPA tariff refunds of $8.3 million partially offset by sales mix headwinds. Total operating expenses for the second quarter of 2026 were relatively consistent with the second quarter of 2025.
PES net sales for the second quarter 2026 were $411.3 million, a decrease of $23.9 million, or 5.5%, as compared to the second quarter 2025. The decrease consisted of an organic sales decline of 6.6%, partially offset by a positive foreign currency translation impact of 1.1%. The $28.7 million decrease in organic sales primarily reflects weakness in the residential HVAC and pool markets, which was partially offset by growth in the commercial HVAC market. Gross profit for the second quarter of 2026 was $141.4 million, an increase of $11.7 million, or 9.0%, as compared to the second quarter of 2025, primarily driven by a benefit from IEEPA tariff refunds of $17.8 million. Total operating expenses for the second quarter of 2026 were relatively consistent with the second quarter of 2025.
The effective tax rate for the three months ended June 30, 2026 was 18.7% versus 21.3% for the three months ended June 30, 2025. The decrease was primarily due to changes in the amount and mix of pre-tax earnings, the relative impact of permanent and discrete tax items, and benefits from tax planning strategies.
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Six Months Ended June 30, 2026 Compared to June 30, 2025
| Six Months Ended | ||||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | |||||||||||||||||||||||||
| Amount | Percent of Net Sales | Amount | Percent of Net Sales | |||||||||||||||||||||||
| Net Sales | ||||||||||||||||||||||||||
| Automation & Motion Control | $ | 934.8 | $ | 807.4 | ||||||||||||||||||||||
| Industrial Powertrain Solutions | 1,317.7 | 1,262.5 | ||||||||||||||||||||||||
| Power Efficiency Solutions | 785.0 | 844.3 | ||||||||||||||||||||||||
| Consolidated | $ | 3,037.5 | $ | 2,914.2 | ||||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||||||||
| Automation & Motion Control | $ | 345.1 | 36.9 | % | $ | 312.7 | 38.7 | % | ||||||||||||||||||
| Industrial Powertrain Solutions | 561.6 | 42.6 | % | 537.9 | 42.6 | % | ||||||||||||||||||||
| Power Efficiency Solutions | 254.8 | 32.5 | % | 241.7 | 28.6 | % | ||||||||||||||||||||
| Consolidated | $ | 1,161.5 | 38.2 | % | $ | 1,092.3 | 37.5 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Automation & Motion Control | $ | 265.1 | 28.4 | % | $ | 247.2 | 30.6 | % | ||||||||||||||||||
| Industrial Powertrain Solutions | 384.8 | 29.2 | % | 363.8 | 28.8 | % | ||||||||||||||||||||
| Power Efficiency Solutions | 143.8 | 18.3 | % | 139.3 | 16.5 | % | ||||||||||||||||||||
| Consolidated | $ | 793.7 | 26.1 | % | $ | 750.3 | 25.7 | % | ||||||||||||||||||
| Income from Operations | ||||||||||||||||||||||||||
| Automation & Motion Control | $ | 80.0 | 8.6 | % | $ | 65.5 | 8.1 | % | ||||||||||||||||||
| Industrial Powertrain Solutions | 176.8 | 13.4 | % | 174.1 | 13.8 | % | ||||||||||||||||||||
| Power Efficiency Solutions | 111.0 | 14.1 | % | 102.4 | 12.1 | % | ||||||||||||||||||||
| Consolidated | $ | 367.8 | 12.1 | % | $ | 342.0 | 11.7 | % | ||||||||||||||||||
| Interest Expense | $ | 158.0 | $ | 175.5 | ||||||||||||||||||||||
| Interest Income | (10.9) | (9.3) | ||||||||||||||||||||||||
| Other Expense, Net | 0.5 | 1.6 | ||||||||||||||||||||||||
| Income before Taxes | 220.2 | 174.2 | ||||||||||||||||||||||||
| Provision for Income Taxes | 39.0 | 37.1 | ||||||||||||||||||||||||
| Net Income | 181.2 | 137.1 | ||||||||||||||||||||||||
| Less: Net Income Attributable to Noncontrolling Interests | 0.2 | 0.6 | ||||||||||||||||||||||||
| Net Income Attributable to Regal Rexnord Corporation | $ | 181.0 | $ | 136.5 | ||||||||||||||||||||||
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Net sales increased $123.3 million or 4.2% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase consisted of an organic sales increase of 2.5% and a positive foreign currency translation impact of 1.8%. The increase in organic sales of $71.2 million was driven by a $112.2 million increase within AMC and a $30.0 million increase within IPS, partially offset by a $71.0 million decrease in organic sales within PES. Gross profit increased $69.2 million, or 6.3%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily driven by a benefit from IEEPA tariff refunds of $32.0 million and increases of $26.5 million and $15.4 million, (excluding the benefit from IEEPA tariff refunds) at AMC and IPS, respectively. Total operating expenses for the six months ended June 30, 2026 increased $43.4 million, or 5.8%, compared to the six months ended June 30, 2025, primarily driven by a $21.0 million increase within IPS and a $17.9 million increase within AMC. Interest expense for the six months ended June 30, 2026 was $158.0 million, a decrease of $17.5 million, or 10.0%, compared to the six months ended June 30, 2025, primarily driven by a reduction in outstanding debt.
AMC net sales for the six months ended June 30, 2026 were $934.8 million, an increase of $127.4 million, or 15.8%, compared to the six months ended June 30, 2025. The increase consisted of an organic sales increase of 13.9% and a positive foreign currency translation impact of 1.9%. The $112.2 million increase in organic sales was primarily driven by broad-based growth, but with particular strength in the data center and discrete automation markets, as well as continued positive trends in the aerospace & defense market. Gross profit increased $32.4 million, or 10.4%, compared to the six months ended June 30, 2025, primarily driven by higher sales volumes and a benefit from IEEPA tariff refunds of $5.9 million. Total operating expenses increased by $17.9 million, or 7.2%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily driven by labor and benefit costs due to inflation and growth investments, and foreign currency impacts.
AMC net sales for the six months ended June 30, 2026 were $934.8 million, an increase of $127.4 million, or 15.8%, compared to the six months ended June 30, 2025. The increase consisted of an organic sales increase of 13.9% and a positive foreign currency translation impact of 1.9%. The $112.2 million increase in organic sales was primarily driven by broad-based growth, but with particular strength in the data center and discrete automation markets, as well as continued positive trends in the aerospace & defense market. Gross profit increased $32.4 million, or 10.4%, compared to the six months ended June 30, 2025, primarily driven by higher sales volumes and a benefit from IEEPA tariff refunds of $5.9 million. Total operating expenses increased by $17.9 million, or 7.2%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily driven by labor and benefit costs due to inflation and growth investments, and foreign currency impacts.
IPS net sales for the six months ended June 30, 2026 were $1,317.7 million, an increase of $55.2 million, or 4.4%, compared to the six months ended June 30, 2025. The increase primarily consisted of an organic sales increase of 2.4% and a positive foreign currency translation impact of 2.1%. The $30.0 million increase in organic sales was primarily driven by strength in the general industrial and energy markets. Gross profit increased $23.7 million, or 4.4%, compared to the six months ended June 30, 2025 primarily driven by higher sales volumes, synergy benefits, a benefit from IEEPA tariff refunds of $8.3 million, and lower restructuring and related costs of $4.3 million. Total operating expenses increased $21.0 million, or 5.8%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily driven by increased labor and benefit costs due to inflation, foreign currency impacts, and a $6.0 million gain on the sale of assets in the first quarter of 2025.
PES net sales for the six months ended June 30, 2026 were $785.0 million, a decrease of $59.3 million, or 7.0%, compared to the six months ended June 30, 2025. The decrease consisted of an organic sales decrease of 8.4%, partially offset by a positive foreign currency translation impact of 1.4%. The $71.0 million decrease in organic sales primarily reflects weakness in the residential HVAC and pool markets, which was partially offset by growth in the commercial HVAC market. Gross profit increased $13.1 million, or 5.4%, as compared to the six months ended June 30, 2025, primarily driven by a benefit from IEEPA tariff refunds of $17.8 million. Total operating expenses for the six months ended June 30, 2026 are relatively consistent with the six months ended June 30, 2025.
The effective tax rate for the six months ended June 30, 2026 was 17.7% versus 21.3% for the six months ended June 30, 2025. The decrease was primarily due to a discrete tax benefit related to stock option exercises in the current year, changes in the amount and mix of pre-tax earnings, the relative impact of permanent and discrete tax items, and benefits from tax planning strategies.
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Non-GAAP Measures
As noted above, we disclose organic sales and organic sales growth as non-GAAP financial measures, and we reconcile these measures in the table below to GAAP net sales. We believe that these non-GAAP financial measures are useful measures for providing investors with additional information regarding our results of operations and for helping investors understand and compare our operating results across accounting periods and compared to our peers. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for the Company's results of operations prepared and presented in accordance with GAAP.
| Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total Regal Rexnord | |||||||||||||||||||||||
| Net Sales Three Months Ended Jun 30, 2026 | $ | 477.7 | $ | 669.4 | $ | 411.3 | $ | 1,558.4 | ||||||||||||||||||
| Impact from Foreign Currency Exchange Rates | (2.4) | (7.5) | (4.8) | (14.7) | ||||||||||||||||||||||
| Organic Sales Three Months Ended Jun 30, 2026 | $ | 475.3 | $ | 661.9 | $ | 406.5 | $ | 1,543.7 | ||||||||||||||||||
| Net Sales Three Months Ended Jun 30, 2025 | $ | 411.1 | $ | 649.8 | $ | 435.2 | $ | 1,496.1 | ||||||||||||||||||
| Net Sales from Businesses Divested | — | (0.9) | — | (0.9) | ||||||||||||||||||||||
| Adjusted Net Sales Three Months Ended Jun 30, 2025 | $ | 411.1 | $ | 648.9 | $ | 435.2 | $ | 1,495.2 | ||||||||||||||||||
| Three Months Ended Jun 30, 2026 Net Sales Growth % | 16.2 | % | 3.0 | % | (5.5) | % | 4.2 | % | ||||||||||||||||||
| Three Months Ended Jun 30, 2026 Foreign Currency Impact % | 0.6 | % | 1.1 | % | 1.1 | % | 1.0 | % | ||||||||||||||||||
| Three Months Ended Jun 30, 2026 Divestitures % | — | % | (0.1) | % | — | % | (0.1) | % | ||||||||||||||||||
| Three Months Ended Jun 30, 2026 Organic Sales Growth % | 15.6 | % | 2.0 | % | (6.6) | % | 3.3 | % | ||||||||||||||||||
| Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions | Total Regal Rexnord | |||||||||||||||||||||||
| Net Sales Six Months Ended Jun 30, 2026 | $ | 934.8 | $ | 1,317.7 | $ | 785.0 | $ | 3,037.5 | ||||||||||||||||||
| Impact from Foreign Currency Exchange Rates | (15.2) | (26.7) | (11.7) | (53.6) | ||||||||||||||||||||||
| Organic Sales Six Months Ended Jun 30, 2026 | $ | 919.6 | $ | 1,291.0 | $ | 773.3 | $ | 2,983.9 | ||||||||||||||||||
| Net Sales Six Months Ended Jun 30, 2025 | $ | 807.4 | $ | 1,262.5 | $ | 844.3 | $ | 2,914.2 | ||||||||||||||||||
| Net Sales from Businesses Divested | — | (1.5) | — | (1.5) | ||||||||||||||||||||||
| Adjusted Net Sales Six Months Ended Jun 30, 2025 | $ | 807.4 | $ | 1,261.0 | $ | 844.3 | $ | 2,912.7 | ||||||||||||||||||
| Six Months Ended Jun 30, 2026 Net Sales Growth % | 15.8 | % | 4.4 | % | (7.0) | % | 4.2 | % | ||||||||||||||||||
| Six Months Ended Jun 30, 2026 Foreign Currency Impact % | 1.9 | % | 2.1 | % | 1.4 | % | 1.8 | % | ||||||||||||||||||
| Six Months Ended Jun 30, 2026 Divestitures % | — | % | (0.1) | % | — | % | (0.1) | % | ||||||||||||||||||
| Six Months Ended Jun 30, 2026 Organic Sales Growth % | 13.9 | % | 2.4 | % | (8.4) | % | 2.5 | % | ||||||||||||||||||
Liquidity and Capital Resources
General
Our principal source of liquidity is cash flow provided by operating activities. In addition to operating income, other significant factors affecting our cash flow include working capital levels, capital expenditures, dividends, share repurchases, acquisitions and divestitures, availability of debt financing and the ability to attract long-term capital at acceptable terms.
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Cash flow provided by operating activities was $191.6 million for the six months ended June 30, 2026, a $433.9 million decrease from the six months ended June 30, 2025. This decrease was primarily driven by $368.5 million of cash proceeds from the sale of receivables under the Securitization Facility in the second quarter 2025 along with other working capital changes. See Note 6 - Receivables Securitization for additional information regarding the Securitization Facility.
Our working capital was $1,582.1 million as of June 30, 2026, compared to $1,448.0 million as of December 31, 2025, an increase of $134.1 million driven by increases in accounts receivables, inventory, and prepaid expenses and other current assets, partially offset by a decrease in cash.
Cash flow used in investing activities was $37.1 million and 29.2 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The increase was primarily driven by proceeds received from sales of property, plant and equipment in 2025.
In 2026, we anticipate capital spending for property, plant and equipment to be approximately $120.0 million. We believe that our present manufacturing facilities will be sufficient to provide adequate capacity for our operations for the remainder of 2026. We anticipate funding the remaining 2026 capital spending with operating cash flows.
Cash flow used in financing activities was $235.4 million and $686.2 million for the six months ended June 30, 2026 and June 30, 2025, respectively. We made net debt repayments of $180.1 million during the six months ended June 30, 2026, compared to net debt repayments of $633.9 million during the six months ended June 30, 2025. The net debt repayments in the current year primarily reflected the repayment of $1,100.0 million of 2026 Senior Notes, partially offset by $850.0 million in proceeds from the 2025 Term Facility and $72.5 million of net borrowings made on the 2025 Revolving Facility during the six months ended June 30, 2026. The net debt repayments in the prior year primarily reflected payments of $615.0 million on the Term Facility and $17.0 million of net payments made on the Multicurrency Revolving Facility during the six months ended June 30, 2025. There were $46.6 million of dividends paid for the six months ended June 30, 2026 and June 30, 2025.
The following table presents selected financial information and statistics as of June 30, 2026 and December 31, 2025:
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Cash and Cash Equivalents | $ | 441.6 | $ | 521.7 | ||||||||||
| Trade Receivables, Net | 580.0 | 524.2 | ||||||||||||
| Inventories | 1,377.9 | 1,321.7 | ||||||||||||
| Accounts Payable | 642.4 | 607.3 | ||||||||||||
| Working Capital | 1,582.1 | 1,448.0 | ||||||||||||
| Current Ratio | 2.3:1 | 2.1:1 | ||||||||||||
As of June 30, 2026, $432.3 million of our cash was held by foreign subsidiaries and could be used in our domestic operations if necessary. We anticipate being able to support our liquidity and operating needs largely through cash generated from operations. We regularly assess our cash needs and the available sources to fund these needs which includes repatriation of foreign earnings which may be subject to withholding taxes. Under current law, we do not expect restrictions or taxes on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future. As of June 30, 2026, we have repatriated $84.3 million of foreign cash in 2026. We are continuing to evaluate opportunities to repatriate additional foreign cash in 2026.
We will, from time to time, maintain excess cash balances which may be used to (i) fund operations, (ii) repay outstanding debt, (iii) fund acquisitions, (iv) pay dividends, (v) make investments in new product development programs and enhancements to existing products, (vi) repurchase our common stock, or (vii) fund other corporate objectives and strategic plans.
The Company borrowed $850.0 million under the 2025 Term Facility on February 12, 2026 and used the proceeds to refinance $1,100.0 million of 2026 Senior Notes. As of June 30, 2026, the Company had $850.0 million outstanding under the 2025 Term Facility and $72.5 million of borrowings under the 2025 Revolving Facility, along with $1,427.5 million of available borrowing capacity. The Company pays a non-use fee on the aggregate unused amount of the 2025 Revolving Facility at a rate determined by reference to its consolidated funded debt to consolidated EBITDA ratio.
The Company plans to use cash generated from operations to fund its interest obligations and reduce the principal balance of its debt over time.
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See Note 7 - Debt and Bank Credit Facilities of the Notes to the Condensed Consolidated Financial Statements for more information.
Guarantor Information
Regal Rexnord Corporation (the “Parent”) is the issuer of the Senior Notes, which are guaranteed by each of its direct and indirect wholly-owned subsidiaries that is a borrower or guarantor under the 2025 Credit Agreement (the “Guarantor Subsidiaries” and, each, a “Guarantor Subsidiary”). The Senior Notes are jointly and severally unconditionally guaranteed on a senior unsecured basis by the Guarantor Subsidiaries. The guarantees are subject to release in limited circumstances upon the occurrence of certain customary conditions. For example, a Guarantor Subsidiary may be released from its guarantee of the Senior Notes under certain circumstances, including following the Parent achieving certain corporate or similar credit ratings. In addition, the guarantee of a Guarantor Subsidiary will automatically terminate under certain circumstances, including if such Guarantor Subsidiary is permanently released from its guarantee of, and is not a borrower under, the 2025 Credit Agreement.
If any of the Parent’s subsidiaries that do not guarantee the Senior Notes (the “Non-Guarantor Subsidiaries”) becomes insolvent, liquidates, reorganizes, dissolves or otherwise winds up, holders of its indebtedness and its trade creditors generally will be entitled to payment on their claims from the assets of such subsidiary before any of those assets would be made available to the Parent or any Guarantor Subsidiary. Consequently, the claims of holders of the Senior Notes are structurally subordinated to all of the existing and future liabilities, including trade payables, of the Non-Guarantor Subsidiaries.
The following tables set forth financial information attributable to the Parent and the Guarantor Subsidiaries (collectively, the “Obligor Group”). The financial information of the Obligor Group is presented on a combined basis, excluding intercompany balances and transactions between entities in the Obligor Group which have been eliminated. The financial information of the Obligor Group excludes equity investments in, and equity income or loss from, subsidiaries that are not in the Obligor Group. Material amounts due from, due to, and transactions with Non-Guarantor Subsidiaries which are included in the condensed financial information of the Obligor Group are presented with each table.
The following table sets forth summarized balance sheet information of the Obligor Group as of June 30, 2026 and December 31, 2025:
June 30, 2026 | December 31, 2025 | |||||||||||||
| Total Current Assets | $ | 925.0 | $ | 935.1 | ||||||||||
| Goodwill | 4,258.8 | 4,221.2 | ||||||||||||
| Intangible Assets, Net of Amortization | 1,940.1 | 1,975.0 | ||||||||||||
| Other Noncurrent Assets | 797.6 | 741.7 | ||||||||||||
Total Noncurrent Assets | 6,996.5 | 6,937.9 | ||||||||||||
| Total Current Liabilities | 661.7 | 692.7 | ||||||||||||
| Long-Term Debt | 4,556.0 | 4,732.0 | ||||||||||||
| Other Noncurrent Liabilities | 3,535.4 | 3,462.5 | ||||||||||||
Total Noncurrent Liabilities | 8,091.4 | 8,194.5 | ||||||||||||
| Due from Non-Guarantor Subsidiaries | 352.4 | 284.0 | ||||||||||||
| Due to Non-Guarantor Subsidiaries | $ | 3,056.6 | $ | 2,952.4 | ||||||||||
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The following table sets forth summarized income statement information of the Obligor Group for the six months ended June 30, 2026:
June 30, 2026 | ||||||||||||||
| Net Sales | $ | 1,643.6 | ||||||||||||
| Gross Profit | 655.8 | |||||||||||||
| Income from Operations | 134.1 | |||||||||||||
| Interest Expense | 148.5 | |||||||||||||
| Net Loss | (57.5) | |||||||||||||
| Net Loss Attributable to Regal Rexnord Corporation | (57.5) | |||||||||||||
| Net Sales to Non-Guarantor Subsidiaries | 124.7 | |||||||||||||
| Interest Expense Due to Non-Guarantors | $ | 61.6 | ||||||||||||
Critical Accounting Estimates
Our critical accounting policies and estimates, which are discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, have not materially changed since that report was filed.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk relating to our operations due to changes in interest rates, foreign currency exchange rates and commodity prices of purchased raw materials. We manage the exposure to these risks through a combination of normal operating and financing activities and derivative financial instruments such as interest rate swaps, commodity cash flow hedges and foreign currency forward exchange contracts. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures, which prohibit the use of financial instruments for speculative purposes.
Generally, hedges are recorded on the balance sheet at fair value and are accounted for as cash flow hedges, with changes in fair value recorded in Accumulated Other Comprehensive Income (Loss) (“AOCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on derivatives not designated as hedges are recognized in current earnings.
Interest Rate Risk
We are exposed to interest rate risk on certain of our outstanding debt obligations used to finance our operations and acquisitions. Loans under the 2025 Credit Agreement bear interest at variable rates plus a margin, based on our consolidated net leverage ratio. As of June 30, 2026, we had $3,717.5 million of fixed rate debt and $922.5 million of variable rate debt. Interest rate swaps have been utilized in prior years to manage interest rate risk associated with the Company's floating rate borrowings. There were no outstanding interest rate swaps as of June 30, 2026 and December 31, 2025.
We entered into two forward starting pay fixed/receive floating non-amortizing interest rate swaps in June 2020, with a total notional amount of $250.0 million. These swaps were terminated in March 2022. The cash proceeds of $16.2 million received to settle the terminated swaps were recognized as a reduction to interest expense via the effective interest rate method through June 2025 when the related Term Facility was repaid. We entered into two additional forward starting pay fixed/receive floating non-amortizing interest rate swaps in May 2022, with a total notional amount of $250.0 million and scheduled expiration in March 2027. Upon inception, the swaps were designated as cash flow hedges against forecasted interest payments with gains and losses, net of tax, measured on an ongoing basis, recorded in AOCI. These swaps were terminated on June 30, 2025 in connection with the repayment of the related Term Facility, resulting in cash proceeds and recognized gain of $3.1 million. The gain was recorded in Interest Expense on the Condensed Consolidated Statement of Income.
Foreign Currency Risk
We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of foreign subsidiaries, intercompany loans with foreign subsidiaries and transactions denominated in foreign currencies. Our objective is to minimize our exposure to these risks through a combination of normal operating activities and the utilization of foreign currency exchange contracts to manage our exposure on the forecasted transactions denominated in currencies other than the applicable functional currency. Contracts are executed with credit worthy banks and are denominated in currencies of major industrial countries. We do not hedge our exposure to the translation of reported results of foreign subsidiaries from local currency to United States dollars.
As of June 30, 2026, derivative currency assets (liabilities) of $10.7 million, $0.4 million, and $(10.2) million are recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets, and Other Accrued Expenses, respectively. As of December 31, 2025, derivative currency assets (liabilities) of $11.2 million, $0.5 million, and $(2.9) million, are recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets and Other Accrued Expenses, respectively. There were unrealized gains on derivatives designated as hedges of $4.9 million and $4.7 million, net of tax, recorded in AOCI as of June 30, 2026 and December 31, 2025, respectively. We had net of tax gains of $4.7 million and $2.3 million, as of June 30, 2026 and December 31, 2025, respectively, related to currency derivative gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items affect earnings.
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The following table quantifies the outstanding foreign exchange contracts intended to hedge non-US dollar denominated receivables and payables and the corresponding impact on the value of these instruments assuming a hypothetical 10% appreciation/depreciation of their counter currency on June 30, 2026:
| Gain (Loss) From | ||||||||||||||||||||||||||
| Currency | Notional Amount | Fair Value | 10% Appreciation of Counter Currency | 10% Depreciation of Counter Currency | ||||||||||||||||||||||
| Euro | $ | 875.2 | $ | (5.2) | $ | 87.5 | $ | (87.5) | ||||||||||||||||||
| Chinese Renminbi | 475.8 | 2.4 | 47.6 | (47.6) | ||||||||||||||||||||||
| Mexican Peso | 467.3 | 7.1 | 46.7 | (46.7) | ||||||||||||||||||||||
| Canadian Dollar | 193.4 | (1.8) | 19.3 | (19.3) | ||||||||||||||||||||||
| Swedish Krona | 53.2 | 0.1 | 5.3 | (5.3) | ||||||||||||||||||||||
| Indian Rupee | 43.4 | (1.3) | 4.3 | (4.3) | ||||||||||||||||||||||
| Australian Dollar | 29.6 | (0.3) | 3.0 | (3.0) | ||||||||||||||||||||||
| British Pound | 25.9 | (0.1) | 2.6 | (2.6) | ||||||||||||||||||||||
Gains and losses indicated in the sensitivity analysis would be offset by gains and losses on the underlying forecasted non-US dollar denominated cash flows.
Commodity Price Risk
We periodically enter into commodity hedging transactions to reduce the impact of changing prices for certain commodities such as copper and aluminum based upon forecasted purchases of such commodities. The contract terms of commodity hedge instruments generally mirror those of the hedged item, providing a high degree of risk reduction and correlation.
Derivative commodity assets (liabilities) of $8.4 million, $0.4 million and $(0.2) million, were recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets, and Other Accrued Expenses, respectively as of June 30, 2026. Derivative commodity assets (liabilities) of $9.5 million, $1.1 million, and $(0.4) million are recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets, and Other Accrued Expenses, respectively as of December 31, 2025. There were unrealized gains on derivatives designated as hedges of $6.6 million and $7.8 million, net of tax, recorded in AOCI as of June 30, 2026 and December 31, 2025, respectively. We had derivative commodity gains of $3.6 million and $1.5 million, net of tax, as of June 30, 2026 and December 31, 2025, respectively, on closed hedge instruments in AOCI that will be realized in earnings when the related hedged items affect earnings.
The following table quantifies the outstanding commodity contracts intended to hedge raw material commodity prices and the corresponding impact on the value of these instruments assuming a hypothetical 10% appreciation/depreciation of their prices on June 30, 2026:
| Gain (Loss) From | ||||||||||||||||||||||||||
| Commodity | Notional Amount | Fair Value | 10% Appreciation of Commodity Prices | 10% Depreciation of Commodity Prices | ||||||||||||||||||||||
| Copper | $ | 101.6 | $ | 8.6 | $ | 10.2 | $ | (10.2) | ||||||||||||||||||
Gains and losses indicated in the sensitivity analysis would be offset by the actual prices of the commodities.
The net AOCI hedging component balance consists of $19.8 million of gains as of June 30, 2026 which includes $19.2 million of net current deferred gains that are expected to be realized in the next twelve months. The gain or loss reclassified from AOCI into earnings on such derivatives will be recognized in the same period in which the related item affects earnings.
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Counterparty Risk
We are exposed to credit losses in the event of non-performance by the counterparties to various financial agreements, including our foreign currency exchange contracts and commodity hedging transactions. We manage exposure to counterparty credit risk by limiting our counterparties to major international banks and financial institutions meeting established credit guidelines and continually monitoring their compliance with the credit guidelines. We do not obtain collateral or other security to support financial instruments subject to credit risk. We do not anticipate non-performance by our counterparties but cannot provide assurances.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective to ensure that (a) information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and (b) information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
During the quarter ended March 31, 2026, we implemented a new global consolidation system to support the financial statement close and consolidation process. We updated our internal controls to reflect changes to the financial reporting business processes impacted by the implementation. Except for updates related to the implementation of our new global consolidation system, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material changes in the legal matters described in Part I, Item 3 in our Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated herein by reference. See also Note 12 - Contingencies for more information.
ITEM 1A. RISK FACTORS
Our business and financial results are subject to numerous risks and uncertainties. These risks and uncertainties have not changed materially from those reported in Part I, Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated herein by reference. For additional information regarding risks and uncertainties facing the Company, please also see the information provided under the header "Cautionary Statement" contained in this Quarterly Report on Form 10-Q.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the quarter ended June 30, 2026, we did not acquire any shares in connection with transactions pursuant to equity incentive plans. Under our equity incentive plans, participants may pay the exercise price or satisfy all or a portion of the federal, state and local withholding tax obligations arising in connection with plan awards by electing to (a) have the Company withhold shares of common stock otherwise issuable under the award, (b) tender back shares received in connection with such award or (c) deliver other previously owned shares of common stock, in each case having a value equal to the exercise price or the amount to be withheld.
At a meeting of the Board of Directors on October 26, 2021, the Company's Board of Directors approved the authorization to purchase up to $500.0 million of shares under the Company's share repurchase program. The authorization has no expiration date. There were no repurchases of common stock during the quarter ended June 30, 2026. The maximum value of shares of our common stock remaining available to be purchased as of June 30, 2026 is $145.0 million.
ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
| Exhibit Number | Exhibit Description | |||||||
| 3.1 | Amended and Restated Articles of Incorporation of Regal Rexnord Corporation, effective July 24, 2024. [Incorporated by reference to Exhibit 3.1 to Regal Rexnord Corporation's Form 8-K, filed on July 30, 2024] | |||||||
| 3.2 | Amended and Restated Bylaws of Regal Rexnord Corporation, effective July 22, 2025. [Incorporated by reference to Exhibit 3.1 to Regal Rexnord Corporation's Form 8-K filed on July 25, 2025] | |||||||
| 22 | List of Guarantor Subsidiaries of Guaranteed Securities. | |||||||
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.1 | Certifications of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. | |||||||
| 101.INS | XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101). | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| REGAL REXNORD CORPORATION | |||||
| By: | /s/ Robert J. Rehard | ||||
| Robert J. Rehard Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||
| Date: August 5, 2026 | |||||
| REGAL REXNORD CORPORATION | |||||
| By: | /s/ Alexander P. Scarpelli | ||||
| Alexander P. Scarpelli Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | |||||
| Date: August 5, 2026 | |||||
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