# Regal Rexnord Corp: Form 10-Q for the period ended Mar 31, 2025

- Company: [Regal Rexnord Corp](/companies/rrx.md) (CIK 82811)
- Form: 10-Q
- Filed: 2025-05-06
- Accepted by EDGAR: May 6, 2025, 13:33 ET
- Period: 2025-03-31
- Accession: 0000082811-25-000119
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/82811/000008281125000119/rbc-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/82811/000008281125000119/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $1.42bn | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $890.5m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $527.6m | us-gaap:GrossProfit |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $159.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $90.2m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $15.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $57.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.86 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.86 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 66,500,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $102.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $16.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $23.2m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2025-03-31 | $305.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $2.75bn | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $14.03bn | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $1.22bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2025-03-31 | $5.29bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $5.1m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $6.42bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 27,400 characters.

### (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 and paralleling switchgear. The segment sells into markets that include industrial automation, robotics, food and beverage, aerospace, medical, agricultural and construction, general industrial, data center, and other markets.
- 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 to power industrial applications. The segment serves a broad range of markets that include metals and mining, general industrial, energy, alternative energy, machinery / off-highway, discrete automation and other markets.
- 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 subsystems comprised of two or more of these components. The segment's products are used in residential and commercial HVAC, water heaters, commercial refrigeration, commercial building ventilation, pool and spa, irrigation, dewatering, agricultural, conveying and other applications.

On September 23, 2023, we signed an agreement to sell our industrial motors and generators businesses which represented the substantial majority of the Industrial Systems operating segment. The transaction closed on April 30, 2024. See Note 3 -Divestitures and Note 6 - Segment Information of the Notes to the Condensed Consolidated Financial Statements for further information and a description of the Company's operating segments, respectively.

#### 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.

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”), (ii) less the amount of 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.

#### 2025 Outlook

The Company has updated its annual guidance for GAAP diluted earnings per share to a range of $4.49 to $5.29 due to gain on sale of assets for the three months ended March 31, 2025. The Company's mitigation actions are expected to neutralize the impact of current tariffs on 2025 earnings.

### Results of Operations

| Net Sales: | March 31, 2025 Amount | Percent of Net Sales | March 31, 2024 Amount | Percent of Net Sales |
| --- | ---: | ---: | ---: | ---: |
| Automation & Motion Control | $396.3 |  | $400.2 |  |
| Industrial Powertrain Solutions | 612.7 |  | 643.4 |  |
| Power Efficiency Solutions | 409.1 |  | 385.3 |  |
| Industrial Systems | — |  | 118.8 |  |
| Consolidated | $1,418.1 |  | $1,547.7 |  |
| Gross Profit |  |  |  |  |
| Automation & Motion Control | $158.1 | 39.9% | $159.9 | 40.0% |
| Industrial Powertrain Solutions | 257.5 | 42.0% | 264.8 | 41.2% |
| Power Efficiency Solutions | 112.0 | 27.4% | 99.3 | 25.8% |
| Industrial Systems | — | —% | 29.1 | 24.5% |
| Consolidated | $527.6 | 37.2% | $553.1 | 35.7% |
| Operating Expenses |  |  |  |  |
| Automation & Motion Control | $123.0 | 31.0% | $119.7 | 29.9% |
| Industrial Powertrain Solutions | 175.8 | 28.7% | 182.7 | 28.4% |
| Power Efficiency Solutions | 69.1 | 16.9% | 70.8 | 18.4% |
| Industrial Systems | — | —% | 46.0 | 38.7% |
| Consolidated | $367.9 | 25.9% | $419.2 | 27.1% |
| Income (Loss) from Operations |  |  |  |  |
| Automation & Motion Control | $35.1 | 8.9% | $40.2 | 10.0% |
| Industrial Powertrain Solutions | 81.7 | 13.3% | 82.1 | 12.8% |
| Power Efficiency Solutions | 42.9 | 10.5% | 28.5 | 7.4% |
| Industrial Systems | — | —% | (16.9) | (14.2)% |
| Consolidated | $159.7 | 11.3% | $133.9 | 8.7% |
| Interest Expense | $90.2 |  | 105.4 |  |
| Interest Income | (4.2) |  | (3.1) |  |
| Other Expense, Net | 0.7 |  | 0.3 |  |
| Income before Taxes | 73.0 |  | 31.3 |  |
| Provision for Income Taxes | 15.5 |  | 10.9 |  |
| Net Income | 57.5 |  | 20.4 |  |
| Less: Net Income Attributable to Noncontrolling Interests | 0.2 |  | 0.6 |  |
| Net Income Attributable to Regal Rexnord Corporation | $57.3 |  | $19.8 |  |

#### Three Months Ended March 31, 2025 Compared to March 31, 2024

Net sales for the first quarter 2025 were $1,418.1 million, a decrease of $129.6 million, or 8.4%, compared to the first quarter of 2024. The decrease consisted of a negative impact from divestitures of 7.9%, and a negative foreign currency translation impact of 1.2%, partially offset by an organic sales increase of 0.7%. The decrease from divestitures was primarily due to a reduction of $118.8 million from the divestiture of the industrial motors and generators business. The increase in organic sales of $10.5 million was driven by a $30.7 million increase within PES and a $1.6 million increase within AMC, partially offset by a $21.8 million decrease in organic sales within IPS. Gross profit for the first quarter 2025 was $527.6 million, a decrease of $25.5 million or 4.6% compared to the first quarter 2024 primarily due to a decrease of $29.1 million from the divestiture of the industrial motors and generators business and a decrease of $7.3 million from the IPS segment, partially offset by an increase of $12.7 million from the PES segment. Total operating expenses for the first quarter 2025 were $367.9 million, a decrease of $51.3 million or 12.2% as compared to the first quarter 2024. The decrease was primarily driven by a reduction of $46.0 million from the divestiture of the industrial motors and generators business.

AMC net sales for the first quarter 2025 were $396.3 million, a decrease of $3.9 million or 1.0% as compared to the first quarter 2024. The decrease consisted of negative foreign currency translation of 1.4%, partially offset by an organic sales increase of 0.4% reflecting strength in the aerospace and defense markets and discrete automation markets, net of weakness in the general industrial and medical markets. Gross profit for the first quarter of 2025 is relatively consistent with the first quarter of 2024. Total operating expenses for the first quarter of 2025 are relatively consistent with the first quarter of 2024.

IPS net sales for the first quarter 2025 were $612.7 million, a decrease of $30.7 million or 4.8% as compared to the first quarter 2024. The decrease consisted of an organic sales decline of 3.4% and negative foreign currency translation of 1.4%. The $21.8 million decrease in organic sales primarily reflects declines in metals and mining, and in the machinery/off-highway markets within general industrial, partially offset by growth in energy markets. Gross profit for the first quarter of 2025 was $257.5 million, a decrease of $7.3 million or 2.8% as compared to the first quarter of 2024. The decrease includes higher restructuring expenses of $3.2 million. Total operating expenses for the first quarter of 2025 were $175.8 million, a decrease of $6.9 million, or 3.8% as compared to the first quarter of 2024. The decrease was primarily driven by a $6.0 million gain on the sale of fixed assets in the first quarter of 2025 that did not occur in the first quarter of 2024.

PES net sales for the first quarter 2025 were $409.1 million, an increase of $23.8 million or 6.2% as compared to the first quarter 2024. The increase consisted of an organic sales increase of 8.0%, negative impact of divestitures of 0.9%, and negative foreign currency translation of 0.9%. The $30.7 million increase in organic sales primarily reflects growth in the N.A. residential HVAC market. Gross profit for the first quarter 2025 was $112.0 million, an increase of $12.7 million or 12.8% as compared to the first quarter 2024. The increase includes lower restructuring expenses of $4.4 million. Total operating expenses for the first quarter of 2025 are relatively consistent with the first quarter of 2024.

The effective tax rate for the three months ended March 31, 2025 was 21.2% versus 34.8% for the three months ended March 31, 2024. The decrease was primarily driven by the non-deductible loss incurred in the prior year associated with the divestiture of the industrial motors and generators business.

### Non-GAAP Measures

As noted above, we disclose organic sales, organic sales growth and acquisition growth 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 | Industrial Systems | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net Sales for Three Months Ended March 31, 2025 | $396.3 | $612.7 | $409.1 | $— | $1,418.1 |
| Impact from Foreign Currency Exchange Rates | 5.5 | 8.9 | 3.4 | — | 17.8 |
| Organic Sales for Three Months Ended March 31, 2025 | $401.8 | $621.6 | $412.5 | $— | $1,435.9 |
| Net Sales for Three Months Ended March 31, 2024 | $400.2 | $643.4 | $385.3 | $118.8 | $1,547.7 |
| Net Sales from Businesses Divested | — | — | (3.5) | (118.8) | (122.3) |
| Adjusted Net Sales Three Months Ended March 31, 2024 | $400.2 | $643.4 | $381.8 | $— | $1,425.4 |
| Three Months Ended Mar 31, 2025 Net Sales Growth % | (1.0)% | (4.8)% | 6.2% | (100.0)% | (8.4)% |
| Three Months Ended Mar 31, 2025 Foreign Currency Impact % | (1.4)% | (1.4)% | (0.9)% | —% | (1.2)% |
| Three Months Ended Mar 31, 2025 Divestitures % | —% | —% | (0.9)% | (100.0)% | (7.9)% |
| Three Months Ended Mar 31, 2025 Organic Sales Growth % | 0.4% | (3.4)% | 8.0% | —% | 0.7% |

### 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.

Cash flow provided by operating activities was $102.3 million for the three months ended March 31, 2025, a $19.2 million increase from the three months ended March 31, 2024. This increase was primarily driven by additional income generated in 2025.

Our working capital was $1,535.0 million as of March 31, 2025, compared to $1,535.6 million as of December 31, 2024, which is comparable period over period.

Cash flow used in investing activities was $3.5 million for the three months ended March 31, 2025 as compared to cash flow used in investing activities of $17.5 million for the three months ended March 31, 2024. The decrease was primarily driven by higher proceeds received from sales of property, plant and equipment in 2025.

In 2025, we anticipate capital spending for property, plant and equipment to be approximately $120 million. We believe that our present manufacturing facilities will be sufficient to provide adequate capacity for our operations for the remainder of 2025. We anticipate funding remaining 2025 capital spending with operating cash flows.

Cash flow used in financing activities was $192.5 million for the three months ended March 31, 2025, compared to $168.0 million used in financing activities for the three months ended March 31, 2024. We made net debt repayments of $164.1 million during the three months ended March 31, 2025, compared to net debt repayments of $137.5 million during the three months ended March 31, 2024. The net debt repayments in the current year primarily reflected payments of $185.0 million on the Term Facility, partially offset by $21.8 million of net borrowings made on the Multicurrency Revolving Facility during the three months ended March 31, 2025. The net debt payments in the prior year primarily resulted from payments of $60.0 million on the Term Facility and $71.7 million net repayments made on the Multicurrency Revolving Facility during the three months ended March 31, 2024. There were $23.2 million of dividends paid for the three months ended March 31, 2025, compared to $23.3 million of dividends paid in the prior year.

The following table presents selected financial information and statistics as of March 31, 2025 and December 31, 2024:

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Cash and Cash Equivalents | $305.3 | $393.5 |
| Trade Receivables, Net | 852.1 | 842.8 |
| Inventories | 1,279.0 | 1,227.5 |
| Accounts Payable | 589.3 | 542.8 |
| Working Capital (Current Assets less Current Liabilities) | 1,535.0 | 1,535.6 |
| Current Ratio | 2.3:1 | 2.3:1 |

As of March 31, 2025, $295.8 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 March 31, 2025, we have repatriated approximately $167.8 million of foreign cash in 2025 to support the repayment of debt. We are continuing to evaluate opportunities to repatriate additional foreign cash in 2025.

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, (vi) repurchase our common stock, or (vii) fund other corporate objectives.

As of March 31, 2025, the Company has $1,100.0 million of 2026 Senior Notes which are scheduled to mature on February 16, 2026. The Company may refinance the 2026 Senior Notes with a long-term financing arrangement or may use its availability under its Multicurrency Revolving Facility and cash generated from operations to repay all or a portion of the 2026 Senior Notes. The Company has adequate liquidity under its Multicurrency Revolving Facility maturing on March 28, 2027 to refinance the 2026 Senior Notes on a long-term basis and accordingly, the Company continues to classify the debt as non-current in the Condensed Consolidated Balance Sheet as of March 31, 2025.

As of March 31, 2025, the Company had $480.0 million of borrowings under the Term Facility and $61.8 million of borrowings under the Multicurrency Revolving Facility, along with $1,508.2 million of available borrowing capacity. The Company pays a non-use fee on the aggregate unused amount of the Multicurrency 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.

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 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 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 March 31, 2025 and December 31, 2024:

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Total Current Assets | 1,165.6 | 1,132.2 |
| Goodwill | 4,220.9 | 4,220.9 |
| Intangible Assets, Net of Amortization | 2,126.9 | 2,178.3 |
| Other Noncurrent Assets | 904.9 | 863.3 |
| Total Assets | 7,252.7 | 7,262.5 |
| Total Current Liabilities | 663.8 | 658.0 |
| Long-Term Debt | 5,266.8 | 5,428.0 |
| Other Noncurrent Liabilities | 3,663.6 | 3,682.5 |
| Total Liabilities | 8,930.4 | 9,110.5 |
| Due from Non-Guarantor Subsidiaries | 444.0 | 398.5 |
| Due to Non-Guarantor Subsidiaries | 3,107.9 | 3,114.0 |

The following table sets forth summarized income statement information of the Obligor Group for the three months ended March 31, 2025 and March 31, 2024:

|  | March 31, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| Net Sales | 794.1 | 829.2 |
| Gross Profit | 302.8 | 315.7 |
| Income from Operations | 60.5 | 39.6 |
| Interest Expense | 114.8 | 125.4 |
| Net Loss | (49.2) | (69.6) |
| Net Loss Attributable to Regal Rexnord Corporation | (49.2) | (69.6) |
| Net Sales to Non-Guarantor Subsidiaries | 57.8 | 67.5 |
| Interest Expense Due to Non-Guarantors | 28.5 | 20.5 |

### 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, 2024, have not materially changed since that report was filed.

## Market risk

As filed, 9,427 characters.

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”) in each accounting period. An ineffective portion of the hedges' change in fair value, if any, is recorded in earnings in the period of change.

#### 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 Credit Agreement bear interest at variable rates plus a margin, based on our consolidated net leverage ratio. As of March 31, 2025, excluding the impact of interest rate swaps, we had $4,794.2 million of fixed rate debt and $541.8 million of variable rate debt. We utilize interest rate swaps to manage fluctuations in cash flows resulting from exposure to interest rate risk on forecasted variable rate interest payments.

Our variable rate debt exposes us to fluctuations in required interest payments due to changes in interest rates. A hypothetical 10% change in our weighted average borrowing rate on outstanding variable rate debt as of March 31, 2025 would result in a $2.6 million change in after-tax annualized earnings. 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 to manage fluctuations in cash flows from interest rate risk related to variable rate interest. These swaps were terminated in March 2022 upon closing the Credit Agreement. The cash proceeds of $16.2 million received to settle the terminated swaps is being recognized into interest expense via the effective interest rate method through July 2025 when the terminated swaps were scheduled to expire. We also entered into two forward starting pay fixed/receive floating non-amortizing interest rate swaps in May 2022, with a total notional amount of $250.0 million to manage fluctuations in cash flows from interest rate risk related to variable rate interest. Upon inception, the swaps were designated as a cash flow hedges against forecasted interest payments with gains and losses, net of tax, measured on an ongoing basis, recorded in AOCI.

Details regarding the instruments as of March 31, 2025 are as follows:

| Instrument | Notional Amount | Maturity | Rate Paid | Rate Received | Fair Value |
| --- | ---: | --- | ---: | --- | ---: |
| Swap | $250.0 | March 2027 | 3.0% | SOFR (3 Month) | $3.3 |

As of March 31, 2025 and December 31, 2024, an interest rate swap asset of $3.3 million and $5.5 million, respectively, was included in Other Noncurrent Assets. There was an unrealized gain of $3.8 million, net of tax, (a $1.3 million gain on the terminated swaps and a $2.5 million gain on the active swaps) and an unrealized gain of $6.4 million, net of tax, (a $2.2 million gain on the terminated swaps and a $4.2 million gain on the active swaps) as of March 31, 2025 and December 31, 2024, respectively, that was recorded in AOCI for the effective portion of the hedges.

#### 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 March 31, 2025, derivative currency assets (liabilities) of $18.7 million, $0.1 million and $(8.4) million are recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets and Other Accrued Expenses, respectively. As of December 31, 2024, derivative currency assets (liabilities) of $1.0 million and $13.6 million are recorded in Prepaid Expenses and Other Current Assets and Other Accrued Expenses, respectively. The unrealized loss on the effective portions of the hedges of $2.3 million net of tax, and $5.7 million net of tax, as of March 31, 2025 and December 31, 2024 respectively, were recorded in AOCI. As of March 31, 2025 and December 31, 2024, we had $3.4 million and $2.5 million, respectively, net of tax, currency losses on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings.

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 March 31, 2025:

| Currency | Notional Amount | Fair Value | Gain (Loss) From 10% Appreciation of Counter Currency | 10% Depreciation of Counter Currency |
| --- | ---: | ---: | ---: | ---: |
| Euro | $1,227.5 | $17.6 | $122.8 | $(122.8) |
| Mexican Peso | 209.9 | (3.3) | 21.0 | (21.0) |
| Chinese Renminbi | 355.7 | (4.5) | 35.6 | (35.6) |
| Indian Rupee | 44.6 | 0.4 | 4.5 | (4.5) |
| Canadian Dollar | 108.0 | 0.2 | 10.8 | (10.8) |
| Australian Dollar | 9.6 | — | 1.0 | (1.0) |
| British Pound | 11.8 | — | 1.2 | (1.2) |

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 $3.2 million, $0.5 million and $(0.7) million were recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets and Other Accrued Expenses, respectively, as of March 31, 2025. Derivative commodity assets (liabilities) of $1.0 million and $(4.4) million were recorded in Prepaid Expenses and Other Current Assets and Other Accrued Expenses, respectively as of December 31, 2024. The unrealized gain on the effective portion of the hedges of $2.3 million net of tax and the unrealized loss on the effective portion of the hedges of $3.2 million net of tax, as of March 31, 2025 and December 31, 2024, respectively, was recorded in AOCI. As of March 31, 2025, we had $0.2 million, net of tax, derivative commodity losses on closed hedge instruments. As of December 31, 2024, we had $0.5 million, net of tax, derivative commodity losses on closed hedge instruments in AOCI that were realized in earnings when the hedged items impacted 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 March 31, 2025:

| Commodity | Notional Amount | Fair Value | Gain (Loss) From 10% Appreciation of Commodity Prices | 10% Depreciation of Commodity Prices |
| --- | ---: | ---: | ---: | ---: |
| Copper | $56.0 | $3.0 | $5.6 | $(5.6) |

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 $0.2 million of gains as of March 31, 2025 which includes $2.7 million of net current deferred losses that are expected to be realized in the next twelve months. The gain/loss reclassified from AOCI into earnings on such derivatives will be recognized in the same period in which the related item affects earnings.

#### Counterparty Risk

We are exposed to credit losses in the event of non-performance by the counterparties to various financial agreements, including our interest rate swap agreements, 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.

## Controls and procedures

As filed, 1,521 characters.

### 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

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.

## Risk factors

As filed, 7,915 characters.

Our business and financial results are subject to numerous risks and uncertainties. The following risk factors supplement those reported in Part I, Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, 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.

### Risks Relating to the Legal and Regulatory Environment

**Changes to and uncertainty in US trade policy, tariff and import/export regulations and foreign government regulations or other trade restrictions imposed by the US or other governments have adversely affected our business and could materially affect our operating results, foreign operations, sourcing and financial condition.**

Changes to tariffs and uncertainty in US and international trade policy have adversely impacted and will continue to adversely impact our business and the US and global economy or certain sectors thereof, including our industry, and could have a material adverse effect on our business, operating results, and financial condition. For example, the US has instituted changes in trade policies that include the imposition of higher tariffs on imports into the US, the renegotiation or termination of trade agreements, and may impact other regulations affecting trade between the US and countries where we conduct our business. In particular, the US government imposed tariffs on imports from China, Canada, Mexico and other countries, and such countries have taken, or have threatened to take, retaliatory actions, including imposing retaliatory tariffs. To date, these tariffs and the expected impact from any retaliatory actions have not had a material impact on our business and financial condition. Following the reciprocal tariffs imposed on China by the U.S. on April 2, 2025, we believe that tariffs on goods imported from China, in particular, will have an impact on our business and, while we have plans in place intended to mitigate the impacts of these tariffs on our business, there is no guarantee that such plans will fully mitigate the effects of such tariffs.

Additionally, to date, our internal estimates reflect that the vast majority of goods the Company imports from Canada and Mexico are compliant with the United States-Mexico-Canada Agreement (the “USMCA”) and are therefore exempt from tariffs. While the current tariff regime contemplates that this exemption for USMCA-compliant imports will remain in effect, if the current administration decides to alter or remove this exemption, there could be a material adverse effect on our business, operations and financial results to the extent we are unable to mitigate any resulting impacts. We cannot predict what additional changes to trade policy will be made that may have a material adverse effect on our business, financial condition, and results of operations, or could provide our competitors with an advantage over us.

Our business is also subject to other risks associated with US and foreign legislation and regulations relating to imports, including quotas, duties, fees, or taxes, and other charges or restrictions on imports, which will affect our operations and our ability to import products at current or increased levels, and substantially all of our import operations are subject to customs duties or fees on imported products imposed by the governments where our production facilities are located, including raw materials. For example, following the reciprocal tariffs imposed by the US on Chinese goods, China placed export restrictions on certain rare earth minerals. These restrictions create risk in our supply chain and may increase our costs or limit our ability to produce certain of our products that use rare earth minerals, to the extent we are unable to mitigate the related impacts of these restrictions. We cannot predict whether additional US and foreign customs quotas, duties, fees, taxes or other charges or restrictions, requirements as to raw materials, reporting obligations pertaining to “conflict minerals” and polyfluoroalkyl substances (commonly referred to as “PFAS”), or other restrictions will be imposed in the future or adversely modified, or what effect such actions would have on our operations. Future trade agreements, quotas, duties, fees, or the imposition of import requirements may have a material adverse effect on our business, financial condition, and results of operations.

### Risks Relating to Our Global Footprint

**We manufacture a significant portion of our products outside the US, and political, societal or economic instability or public health or other crises may present additional risks to our business.**

As of December 31, 2024, approximately 21,400 of our approximate 30,300 total full-time associates, and 96 of our principal manufacturing and warehouse facilities, were located outside the US. International operations generally are subject to various risks, including political, societal and economic instability, local labor market conditions, public health crises, breakdowns in trade relations, the imposition of tariffs and other trade restrictions, lack of reliable legal systems, ownership restrictions, the impact of government regulations, the effects of income and withholding taxes, governmental expropriation or nationalization, and differences in business practices.

Unfavorable changes in the political, regulatory and business climates in countries where we have operations could have a material adverse effect on our financial condition, results of operations and cash flows, including, for example, the uncertainty surrounding trade relations between the US and China, Mexico, Canada and other countries. In particular, the US government imposed tariffs on imports from China, Canada, Mexico and other countries, and such countries have taken or have threatened to take retaliatory actions. We expect to incur increased costs in connection with the imposition of tariffs by the US government and of retaliatory tariffs imposed by other countries and may experience delays or disruptions in product deliveries and payments in connection with international manufacturing and sales that could cause loss of revenue or higher non-tariff costs.

Moreover, ongoing geopolitical conflicts, including those between Russia and Ukraine and those occurring in the Middle East and similar conflicts, have negatively impacted the global economy and in some instances, have led to various economic sanctions being imposed by the US, United Kingdom, European Union, and other countries. While the impacts of the conflict have not been material on our operating results to date, it is not possible to predict the broader or longer-term consequences of these conflicts or new conflicts that may arise in the future. Continued escalation of geopolitical tensions related to the conflict could also result in the loss of property, supply chain disruptions, significant inflationary pressure on raw material prices and cost and supply of other resources (such as energy and natural gas), fluctuations in our customers’ buying patterns, credit and capital market disruptions that could impact our ability to obtain financing, increase interest rates and have adverse foreign exchange impacts. These broader consequences could have a material adverse effect on our financial condition, results of operations and cash flows. Such sanctions and other measures, as well as the existing and potential further responses to such sanctions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect the operations of our subsidiaries in impacted regions as well as our business, financial condition and results of operations.

Filed May 6, 2025.
Source: SEC EDGAR, the filing index for accession 0000082811-25-000119. Last ingested by Listed: Nov 3, 2026, 18:27 ET. No prices; not investment advice.