REGAL REXNORD CORP

Previous wording

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.

Current wording

Regal Rexnord Corporation (NYSE: RRX) (“we,” “us,” “our” or the “Company”) and its employees 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.

Previous wording

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.

Current wording

On February 20, 2026, the US Supreme Court ruled that tariffs imposed under IEEPA were not authorized by the statute. We are the importer of record for certain raw materials and products that were previously subject to such tariffs under IEEPA. We recorded a $17.8 million and $49.8 million reduction to Cost of Sales related to certain IEEPA tariff refunds for the three and nine months ended September 30, 2026, respectively. 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. See Note 2 - Other Financial Information of the Notes to the Condensed Consolidated Financial Statements for more information.

Previous wording

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.

Current wording

Net sales for the third quarter of 2026 were $1,588.0 million, an increase of $91.0 million, or 6.1%, compared to the third quarter of 2025. The increase consisted of an organic sales increase of 6.1%. The increase in organic sales of $90.7 million was primarily driven by a $101.2 million increase within AMC, partially offset by a $12.2 million decrease within IPS. Gross profit for the third quarter of 2026 was $590.2 million, an increase of $36.0 million, or 6.5%, compared to the third quarter 2025, primarily driven by a benefit from IEEPA tariff refunds of $17.8 million and an increase of $20.8 million (excluding the benefit from IEEPA tariff refunds) at AMC. Total operating expenses for the third quarter of 2026 were $508.8 million, an increase of $129.0 million, or 34.0%, as compared to the third quarter 2025, primarily due to a goodwill impairment at AMC of $119.3 million.

Previous wording

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.

Current wording

PES net sales for the third quarter of 2026 were $437.9 million, an increase of $5.2 million, or 1.2%, as compared to the third quarter of 2025. The increase consisted of an organic sales increase of 0.4% and a positive foreign currency translation impact of 0.8%. The $1.7 million increase in organic sales primarily reflects growth in the commercial HVAC market, which was partially offset by weakness in the residential HVAC and pool markets. Gross profit for the third quarter of 2026 was $142.2 million, an increase of $10.7 million, or 8.1%, as compared to the third quarter of 2025, primarily driven by a benefit from IEEPA tariff refunds of $8.2 million. Total operating expenses for the third quarter of 2026 were relatively consistent with the third quarter of 2025.

Previous wording

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.

Current wording

Net sales for the nine months ended September 30, 2026 were $4,625.5 million, an increase of $214.3 million, or 4.9%, compared to the nine months ended September 30, 2025. The increase primarily consisted of an organic sales increase of 3.7% and a positive foreign currency translation impact of 1.3%. The increase in organic sales of $162.0 million was driven by a $213.5 million increase within AMC and a $17.8 million increase within IPS, partially offset by a $69.3 million decrease in organic sales within PES. Gross profit increased $105.2 million, or 6.4%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by a benefit from IEEPA tariff refunds of $49.8 million and increases of $47.3 million and $10.4 million, (excluding the benefit from IEEPA tariff refunds) at AMC and IPS, respectively. Total operating expenses for the nine months ended September 30, 2026 increased $172.2 million, or 15.2%, compared to the nine months ended September 30, 2025, primarily driven by an increase at AMC of $146.3 million, which included a goodwill impairment of $119.3 million, and an increase at IPS of $19.4 million. Interest expense for the nine months ended September 30, 2026 was $234.9 million, a decrease of $27.6 million, or 10.5%, compared to the nine months ended September 30, 2025, primarily driven by a reduction in outstanding debt.

Previous wording

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.

Current wording

AMC net sales for the nine months ended September 30, 2026 were $1,435.4 million, an increase of $226.0 million, or 18.7%, compared to the nine months ended September 30, 2025. The increase consisted of an organic sales increase of 17.7% and a positive foreign currency translation impact of 1.0%. The $213.5 million increase in organic sales was primarily driven by broad-based growth, but with particular strength in data center, including $25 million of sales related to E-Pods, discrete automation, and aerospace and defense markets. Gross profit increased $56.8 million, or 12.3%, compared to the nine months ended September 30, 2025, primarily driven by higher sales volumes and a benefit from IEEPA tariff refunds of $9.5 million. Total operating expenses increased by $146.3 million, or 39.2%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by a goodwill impairment of $119.3 million, higher labor and benefit costs due to inflation and growth investments, and foreign currency impacts.

Previous wording

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.

Current wording

IPS net sales for the nine months ended September 30, 2026 were $1,967.2 million, an increase of $42.4 million, or 2.2%, compared to the nine months ended September 30, 2025. The increase primarily consisted of an organic sales increase of 0.9% and a positive foreign currency translation impact of 1.4%. The $17.8 million increase in organic sales was primarily driven by strength in the energy, general industrial, and discrete automation markets partially offset by weakness in the metals and mining market. Gross profit increased $24.7 million, or 3.0%, compared to the nine months ended September 30, 2025, primarily driven by a benefit from IEEPA tariff refunds of $14.3 million, lower restructuring and related costs of $6.5 million and synergy benefits, partially offset by the impact of certain operational inefficiencies. Total operating expenses increased $19.4 million, or 3.5%, for the nine months ended September 30, 2026 compared to the nine months ended September 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.

Previous wording

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.

Current wording

PES net sales for the nine months ended September 30, 2026 were $1,222.9 million, a decrease of $54.1 million, or 4.2%, compared to the nine months ended September 30, 2025. The decrease consisted of an organic sales decrease of 5.4%, partially offset by a positive foreign currency translation impact of 1.2%. The $69.3 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 $23.7 million, or 6.4%, as compared to the nine months ended September 30, 2025, primarily driven by a benefit from IEEPA tariff refunds of $26.0 million. Total operating expenses for the nine months ended September 30, 2026 were relatively consistent with the nine months ended September 30, 2025.

Previous wording

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.

Current wording

The effective tax rate for the nine months ended September 30, 2026 and September 30, 2025 was 26.9% and 18.4%, respectively. The increase was primarily due to the relative impact of permanent and discrete tax items, including a non-deductible goodwill impairment in the current year, partially offset by benefits from tax planning strategies.

Previous wording

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.

Current wording

Cash flow provided by operating activities was $411.4 million for the nine months ended September 30, 2026, a $411.6 million decrease from the nine months ended September 30, 2025. This decrease was primarily driven by $398.3 million of cash proceeds from the sale of receivables under the Securitization Facility in 2025 along with other working capital changes. See Note 7 - Receivables Securitization for additional information regarding the Securitization Facility.

Previous wording

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.

Current wording

Our working capital (inclusive of assets and liabilities classified as held for sale) was $1,587.1 million as of September 30, 2026, compared to $1,448.0 million as of December 31, 2025, an increase of $139.1 million driven by increases in prepaid expenses and other current assets, inventory, and accounts receivables, partially offset by a decrease in cash and increase in accounts payable.

Previous wording

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.

Current wording

Cash flow used in investing activities was $61.8 million and $52.1 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The increase was primarily driven by proceeds received from sales of property, plant and equipment in 2025.

Previous wording

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.

Current wording

In 2026, we anticipate capital spending for property, plant and equipment to be approximately $110.0 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.

Previous wording

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.

Current wording

Cash flow used in financing activities was $420.5 million and $784.5 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. We made net debt repayments of $340.0 million during the nine months ended September 30, 2026, compared to net debt repayments of $708.4 million during the nine months ended September 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 $500.0 million in net proceeds from the 2025 Term Facility and $271.2 million of net borrowings made on the 2025 Revolving Facility during the nine months ended September 30, 2026. The net debt repayments in the prior year primarily reflected payments of $665.0 million on the Term Facility and $40.0 million of net payments made on the Multicurrency Revolving Facility during the nine months ended September 30, 2025. There were $69.9 million and $69.7 million of dividends paid for the nine months ended September 30, 2026 and September 30, 2025, respectively.

Previous wording

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.

Current wording

As of September 30, 2026, $444.3 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 September 30, 2026, we have repatriated $440.4 million of foreign cash in 2026. We are continuing to evaluate opportunities to repatriate additional foreign cash in 2026.

Previous wording

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.

Current wording

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. The Company made a prepayment of $350.0 million on September 25, 2026. As of September 30, 2026, the Company had $500.0 million outstanding under the 2025 Term Facility and $268.8 million of borrowings under the 2025 Revolving Facility, including approximately €230.0 million, or $260.9 million, of euro-denominated borrowings, along with $1,231.2 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.

Previous wording

See Note 7 - Debt and Bank Credit Facilities of the Notes to the Condensed Consolidated Financial Statements for more information.

Current wording

See Note 8 - Debt and Bank Credit Facilities and Note 3 - Held for Sale of the Notes to the Condensed Consolidated Financial Statements for more information.

Previous wording

The following table sets forth summarized income statement information of the Obligor Group for the six months ended June 30, 2026:

Current wording

The following table sets forth summarized income statement information of the Obligor Group for the nine months ended September 30, 2026:

Previous wording

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.

Current wording

Except as discussed above, there have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.