REGAL REXNORD CORP

7. DEBT AND BANK CREDIT FACILITIES

The Company’s indebtedness as of March 31, 2026 and December 31, 2025 was as follows:

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 thefour 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 $3,751.4 million and $4,903.4 million as of March 31, 2026 and December 31, 2025, respectively, compared to a carrying value of $3,600.0 million and $4,700.0 million as of March 31, 2026 and December 31, 2025, respectively. The Company believes that the fair value of all other debt instruments approximates their carrying value.

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 March 31, 2026 the Company hadno standby letters of credit issued under the 2025 Revolving Facility and $1,332.2 million of available borrowing capacity. The average daily balance in borrowings under the 2025 Revolving Facility was $135.5 million for the three months ended March 31, 2026. The average daily balance in borrowings under the Multicurrency Revolving Facility was $81.4 million for the three months ended March 31, 2025. The Company paid a non-use fee of 0.15% as of March 31, 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:

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 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 March 31, 2026.

Finance Leases

The weighted average discount rate associated with the Company's finance leases was 8.9% as of March 31, 2026 and 5.2% as of March 31, 2025.

8. RETIREMENT PLANS

The following table presents the Company’s net periodic benefit cost (income) components of its defined benefit plans:

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 March 31, 2026 and March 31, 2025, the Company contributed$2.5 million and $5.1 million, respectively, to its defined benefit pension plans. 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 March 31, 2026 and March 31, 2025, the Company contributed $13.2 million and $7.3 million, respectively, to its defined contribution plans.

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 Company's Board of Director's approval of PSU metric achievement, generally in the first quarter after the conclusion of thethree-year overall performance period. PSUs are granted at performance target of 100%.

For the three months ended March 31, 2026, the Company issued 41,610 Performance Share Units ("2026 PSUs"). The 2026 PSUs includetwo 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 $8.0 million and $9.5 million in share-based compensation expense for the three months ended March 31, 2026 and March 31, 2025, respectively. The total income tax benefit recognized for share-based compensation expense was $5.3 million and $1.1 million for the three months ended March 31, 2026 and March 31, 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.

During thethree months ended March 31, 2026, the Company granted the following share-based incentive awards:

10. INCOME TAXES

The effective tax rate for the three months ended March 31, 2026 was 15.9% versus 21.2% for the three months ended March 31, 2025. The decrease was primarily driven by a discrete tax benefit related to stock option exercises in the current year.

As of March 31, 2026 and December 31, 2025, the Company had approximately $4.5 million and $4.2 million 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 approximately $0.6 million and $0.5 million of accrued interest as of March 31, 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 March 31, 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 0.1 million and 0.3 million for the three months ended March 31, 2026 and March 31, 2025, respectively. The following table reconciles the basic and diluted shares used in earnings per share calculations for the three months ended March 31, 2026 and March 31, 2025: