Regal Rexnord Reports Strong First Quarter 2025 Financial Results

Regal Rexnord Corporation has released its SEC 8-K filing for the first quarter of 2025, showcasing robust financial performance and strategic initiatives. The company, known for its electric motors and power transmission components, reported significant growth in key financial metrics and provided insights into its future outlook.

Financial Highlights

For the first quarter of 2025, Regal Rexnord reported a diluted EPS of $0.86 and an adjusted diluted EPS of $2.15, marking a 7.5% increase compared to the previous year. The company also achieved a 32.4% increase in free cash flow, amounting to $85.5 million. Sales for the quarter were $1,418.1 million, a decrease of 8.4% from the previous year, but a 0.7% increase on an organic basis. The gross margin stood at 37.2%, with an adjusted gross margin of 37.9%, up 50 basis points from the prior year.

Business and Operational Highlights

Regal Rexnord's business segments showed varied performance. The Power Efficiency Solutions (PES) segment achieved 8.0% organic growth, driven by strong R-HVAC markets. The Automation & Motion Control (AMC) segment saw a 0.4% increase in organic sales, with notable growth in aerospace and defense markets. The Industrial Powertrain Solutions (IPS) segment experienced a 3.4% decline in organic sales, primarily due to sluggish general industrial markets.

Strategic Initiatives and Corporate Developments

The company paid down $164 million of gross debt in the first quarter, reducing its net debt/adjusted EBITDA ratio to approximately 3.6x. Regal Rexnord also reaffirmed its 2025 adjusted guidance and announced mitigation actions to neutralize the impact of current tariffs on adjusted EBITDA and EPS for the year.

Management's Perspective

CEO Louis Pinkham highlighted the strong start to the year, with all segments exceeding guidance. He emphasized the company's disciplined cost management and solid execution, which contributed to positive organic growth and margin expansion. Pinkham also noted the company's cautious optimism about approaching an organic growth inflection point, despite recent shifts in U.S. trade policy.

Future Outlook

Regal Rexnord updated its annual guidance for 2025 GAAP diluted earnings per share to a range of $4.49 to $5.29, while reaffirming its adjusted diluted earnings per share guidance of $9.60 to $10.40. The company expects to achieve tariff cost neutrality in 2025 and margin neutrality by mid-2026 under current tariffs.

SEC Filing: REGAL REXNORD CORP [ RRX ] - 8-K - May. 06, 2025