RRX

Looking back on engineered components and systems stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including Regal Rexnord (NYSE:RRX) and its peers. Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings. The 13 engineered components and systems stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was 1.6% above. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results. Headquartered in Milwaukee, Regal Rexnord (NYSE:RRX) provides power transmission and industrial automation products. Regal Rexnord reported revenues of $1.56 billion, up 4.2% year on year. This print fell short of analysts’ expectations by 1.1%. Overall, it was a mixed quarter for the company with an impressive beat of analysts’ EBITDA estimates but a slight miss of analysts’ organic revenue estimates. Regal Rexnord delivered the slowest revenue growth of the whole group. The market seems disappointed with the results as the stock is down 19.4% since reporting and currently trades at $177.25. Is now the time to buy Regal Rexnord? Access our full analysis of the earnings results here, it’s free. Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries. Enpro reported revenues of $338.8 million, up 17.6% year on year, outperforming analysts’ expectations by 4.7%. The business had an exceptional quarter with full-year EBITDA guidance exceeding analysts’ expectations. The market seems content with the results as the stock is up 2.7% since reporting. It currently trades at $343.23. Is now the time to buy Enpro? Access our full analysis of the earnings results here, it’s free. Founded by a steel salesman, Worthington (NYSE:WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets. Worthington reported revenues of $371.5 million, up 16.9% year on year, falling short of analysts’ expectations by 4%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates. Worthington delivered the weakest performance against analyst estimates among its peers. The stock is flat since the results and currently trades at $58.68. Read our full analysis of Worthington’s results here. Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE:GTES) offers power transmission and fluid transfer equipment for various industries. Gates Industrial Corporation reported revenues of $941.6 million, up 6.6% year on year. This result surpassed analysts’ expectations by 1.7%. It was a very strong quarter as it also produced a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates. The stock is up 7.7% since reporting and currently trades at $27.76. Read our full, actionable report on Gates Industrial Corporation here, it’s free. Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries. Applied Industrial reported revenues of $1.35 billion, up 10.4% year on year. This number beat analysts’ expectations by 4.6%. Overall, it was an exceptional quarter as it also put up an impressive beat of analysts’ organic revenue and EBITDA estimates. The stock is flat since reporting and currently trades at $351.10. Read our full, actionable report on Applied Industrial here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Regal Rexnord’s second quarter saw its sales growth fall short of Wall Street’s expectations, driving a significant negative market reaction. Management attributed the shortfall to persistent weakness in residential HVAC and pool markets, as well as timing delays in large project deliveries, particularly in the Industrial Powertrain Solutions segment. CEO Aamir Paul, in his first call, emphasized the company’s strong order momentum and highlighted areas of strength such as data center, commercial HVAC, and discrete automation. CFO Rob Rehard noted, “Our team delivered solid second quarter performance… with encouraging progress in order growth and margin expansion,” but acknowledged that certain end markets remained challenging. Is now the time to buy RRX? Find out in our full research report (it’s free). Revenue: $1.56 billion vs analyst estimates of $1.58 billion (4.2% year-on-year growth, 1.1% miss) Adjusted EPS: $2.99 vs analyst estimates of $2.58 (15.7% beat) Adjusted EBITDA: $366.6 million vs analyst estimates of $340 million (23.5% margin, 7.8% beat) Management reiterated its full-year Adjusted EPS guidance of $10.60 at the midpoint Operating Margin: 13.8%, up from 12.2% in the same quarter last year Organic Revenue rose 3.3% year on year (miss) Market Capitalization: $11.49 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Michael Halloran (Baird) pressed on the timing for order conversion to revenue and the impact on future quarters. CFO Rob Rehard said strong order growth will drive results in 2027, but current revenue lags due to project timing. Jeffrey Hammond (KeyBanc Capital Markets) questioned service level issues and whether share losses were occurring. Rehard clarified that service levels have not declined, but productivity initiatives were delayed to maintain customer satisfaction. Kyle Menges (Citigroup) asked about data center order pipeline and slower conversion rates. Rehard confirmed the switchgear pipeline is stable, with expectations of increased shipments in the coming year. Nicole DeBlase (Deutsche Bank) inquired about the confidence in second-half growth guidance and the impact of price/cost dynamics. Rehard explained that robust order backlog underpins guidance, but acknowledged modest headwinds from inflation and lagging price realization. Christopher Dankert (D.A. Davidson) sought clarity on project roll-offs in IPS and rare earth magnet supply. Rehard noted project roll-offs are timing-related and expects backfilling in 2027, while rare earth supply for commercial uses is mostly mitigated, with defense applications facing slower approval. Looking ahead, the StockStory team will be monitoring (1) the pace at which AMC and IPS order backlogs convert to revenue, (2) margin recovery as pricing actions and productivity measures take effect, and (3) further progress in scaling the ePOD facility and capturing data center demand. How management navigates inflation and executes on delayed projects will also be key to tracking Regal Rexnord’s trajectory. Regal Rexnord currently trades at $174.20, down from $220.04 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 11 a.m. ET Vice President of Investor Relations - Robert Barry Chief Executive Officer - Aamir Paul Executive Vice President and Chief Financial Officer - Rob Rehard Operator: Good morning, and welcome to the Regal Rexnord Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Robert Barry, Vice President of Investor Relations. Please go ahead. Robert Barry: Thank you, operator. Good morning, and welcome to Regal Rexnord's Second Quarter 2026 Earnings Conference Call. Joining me today are Aamir Paul, our Chief Executive Officer; and Rob Rehard, our Chief Financial Officer. I'd like to remind you that during today's call, you may hear forward-looking statements related to our future financial results, plans and business operations. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in today's press release and in our reports filed with the SEC, which are available on the regalrexnord.com website. Also on this slide, we state that we are presenting certain non-GAAP financial measures that we believe are useful to our investors, and we have included reconciliations between the non-GAAP financial information and the GAAP equivalent in the press release and in these presentation materials. Turning to Slide 3. Let me briefly review the agenda for today's call. Please note that given Aamir's tenure with the company began on July 1, after the conclusion of our second quarter, we are going to modify our typical approach to the call. Aamir will lead off with some introductory comments. Rob will then provide an overview of our second quarter performance at the enterprise level, review our second quarter financial results in more detail by segment and conclude by discussing our updated 2026 guidance. We will then move to Q&A, after which the call will conclude. And with that, I'll turn it over to Aamir. Aamir Paul: Thanks, Rob, and good morning, everyone. Thank you for joining us to discuss our second quarter results. We appreciate your interest in Regal Rexnord. I'm honored and excited to be Regal Rexnord's sixth CEO in our 71-year history, and I want to thank the Board for entrusting me with the responsibility of leading this exceptional company. I'd also like to thank my predecessor, Louis Pinkham. Given this is my first call, I thought I'd begin by sharing a bit about my background, why I decided to join and how I've spent my time over the past 5 weeks. I'll conclude with a few initial observations. So starting with my background. I'm a chemical engineer by training. Professionally, I began my career at Dell Technologies, where I spent 13 years split equally between Austin and London. My time at Dell was mostly in sales and marketing roles, including the transition to an omnichannel go-to-market. I joined Schneider Electric in 2013, first in the U.S. business, leading sales and operations and with the last 4 leading North American operations as a member of the Global Executive Committee. These experiences included global and local roles. They span sales, strategy, operations and business leadership. I have worked with customers and partners in markets that include data centers, energy technology, discrete and process automation as well as life cycle services. I came to Regal Rexnord because I see tremendous opportunities across the company's portfolio, strong channel positions, manufacturing scale and healthy balance sheet. This gives us the ability to address customer needs in a range of very attractive end markets. Regal Rexnord today is a highly capable provider of foundational components that are critical in a wide variety of applications. Some of these are tried and true, such as factory automation, aerospace and defense and air moving and some are emerging and exciting like robotics and eVTOL. It's also great to see our participation in the data center space, and I'm spending time with our teams there to explore our solution road map and understand our customer pipeline. Overall, our broad exposure across attractive end markets is exciting as we continue to build for the future. Now since joining the company on July 1, my primary focus has been listening and learning, and this will continue to be my focus in the coming months as I interact with our teams, our customers, channel and supply chain partners and our investors. Specifically to our investors and analysts, I look forward to spending time with you and understanding your perspectives. I want to thank you in advance for your patience as I balance relationship building with better understanding of our business and customers' needs. While I've only been on the job for 5 weeks, I want to share some early impressions. First is the strength of the team. I've been repeatedly impressed with their knowledge of our products, their commitment to serving our customers and their pride in being part of Regal Rexnord. While we have worked to finish on integration, we are increasingly engaging as one team to better serve our customers. Second is around our channel and customer relationships. In the first few conversations, it's clear that we have strong partnerships and trust that has been built over time. We will continue to raise the bar on how we execute to keep earning that trust every day. And finally, the strength of the franchise. We have great technology, trusted brands, a large installed base of products that support attractive aftermarket sales. Couple this with high-quality manufacturing and a culture of continuous improvement, and you have a foundation for building a platform for sustainable and profitable growth. And with that, I'll turn the call over to Rob. Robert Rehard: Thanks, Aamir, and good morning, everyone. I'll begin by covering our enterprise performance and then move to the segment discussions, followed by a guidance update. Our team delivered solid second quarter performance, and I want to begin by thanking our 30,000 Regal Rexnord associates for their hard work and disciplined execution. Orders in the quarter on a daily basis were up 8.8% versus the prior year or 8.1% excluding data center. Encouragingly, orders excluding our consumer-leaning businesses, residential HVAC and pool were up low double digits in the quarter. We are seeing evidence of both improving end markets and further returns on our growth investments. Orders at AMC were a standout positive, up 17.1% versus the prior year period and up 15% excluding data center, on broad-based positive momentum. Orders in IPS were up 6.7% versus the prior year on strength in the energy and general industrial markets. In PES, orders were up 3.5% on strength in commercial HVAC, which was largely offset by weakness in the consumer-weighted residential HVAC and pool markets. Enterprise orders in July were up 7% on a daily basis. Shifting to sales. Our sales in the quarter were up 4.2% versus the prior year and up 3.3% on an organic basis or up 6.1% excluding residential HVAC and pool. We saw broad-based growth with notable strength in data center, commercial HVAC, discrete automation and energy markets. AMC led the way on growth, up over 15% organically versus the prior year and up 8% excluding data center. The AMC team continues to execute its backlog and drive share gains in its largely secular markets. Turning to margins. Our second quarter adjusted gross margin was 39.8% or 37.8%, excluding IEEPA tariff refunds. We recorded $32 million of refunds in the quarter. I will discuss these refunds in greater detail in the guidance section of the presentation. Our second quarter gross margin performance versus prior year, excluding refunds, largely reflects our team's ability to overcome headwinds from a higher-than-anticipated inflation, mix, tariffs and rare earth magnets with leverage from higher volumes and benefits from synergies. Adjusted EBITDA margin was 23.5% or 21.5%, excluding refunds. Versus the prior year, the second quarter margin performance reflects the gross margin drivers I mentioned as well as growth investments. Notably, AMC's adjusted EBITDA margin improved this quarter and has room for further improvement, especially in the fourth quarter, which I will discuss in more detail later in the presentation. Shifting to earnings. Adjusted earnings per share for the quarter was $2.99 or $2.60, excluding the benefit from refunds, which equates to 5% adjusted earnings growth versus the prior year, excluding the refunds. Lastly, adjusted free cash flow was $154 million in the quarter, a nice sequential improvement aided by higher EBITDA, lower interest costs and normal seasonality. When comparing our second quarter cash flows to the prior year quarter, keep in mind that our cash flows in the second quarter of 2025 benefited from $369 million of proceeds from our accounts receivable securitization program. On the whole, a solid quarter. I'll now review our operating performance by segment. Starting with Automation and Motion Control, or AMC, Sales in the second quarter were up 15.6% versus the prior year period on an organic basis. This performance reflects broad-based strength, but with especially strong growth in data center, discrete automation and aerospace and defense. We attribute the strength to improving underlying end market momentum in AMC's largely secular markets and traction in our growth investments. Turning to margins. AMC's adjusted EBITDA margin in the quarter was 21.1% or 19.9%, excluding refunds. Versus the prior year, AMC margins were up 40 basis points, mainly reflecting higher volumes, partially offset by growth investments. Orders in AMC in the second quarter were up 17.1% versus the prior year, which reflects broad-based growth, but with particular strength in aerospace and defense, discrete automation and data center. As stated earlier, excluding data center, AMC's orders were up 15%. Book-to-bill in the second quarter for AMC was 1.02. July orders for AMC were up 7.4% on a daily basis versus the prior year period. Before I leave AMC, I'd like to highlight that in the first half, AMC's daily orders were up over 25% versus the prior year period. This performance is supporting the healthy top line growth AMC has been delivering and which we expect to continue. Keep in mind, however, that nearly half of this order growth reflects longer cycle projects and blanket orders that are expected to benefit the P&L in 2027 and in some cases, 2028. Turning to Industrial Powertrain Solutions, or IPS. Sales in the second quarter were up 2% versus the prior year on an organic basis, which was in line with our expectations. Growth in the quarter was led by the energy market, which includes power gen, where we are benefiting from strong growth in the data center market. A notable area of weakness was machinery off-highway, which includes pressure we are seeing in the ag market. I will also share some detail by channel. Our short-cycle OEM sales were up mid-single digits, which we believe is consistent with favorable ISM data, and our distribution channel sales were up low single digits. Adjusted EBITDA margin for IPS in the quarter was 27.1% or 25.9%, excluding refunds. Compared to the prior year, margins were down as expected due to the impact of product mix, growth investments and higher inflation. Orders in IPS on a daily basis were up 6.7% in the second quarter. The growth was broad-based, but with the largest contributions coming from the general industrial and energy markets. Notably, orders into the distributor channel accelerated, tracking up 8% in the quarter and consistent with a stronger short-cycle outlook. Orders for short-cycle OEM were up 4%, but that follows 9% growth last quarter, equating to just over 6% growth for the first half. So we continue to feel good about what we are seeing in short-cycle OEM. Finally, large project orders also accelerated, up 8%, aided by wins in metals and mining. This project strength has helped put our IPS shippable backlog for 2027 up over 20% versus where our 2026 shippable backlog stood at this time last year, an early positive sign for 2027. Book-to-bill in the second quarter for IPS was 1.06. July orders for IPS were up 7.7% on a daily basis versus the prior year period. Turning to Power Efficiency Solutions or PES. Sales in the second quarter were down 6.6% versus the prior year on an organic basis. The year-over-year decline was primarily driven by weakness in residential HVAC and pool. We believe that demand in residential HVAC remains weak due to a soft housing market, low consumer confidence and lingering pockets of excess channel inventories. At the same time, commercial HVAC remains a clear positive offset, aided by data center construction and continued traction in regional outgrowth initiatives. In the quarter, we also experienced incremental friction related to changes in Section 232 tariffs as some OEMs appeared to delay orders and production decisions ahead of the anticipated changes. And then again, as they reevaluated production plans following the tariff proclamations. In contrast, our commercial HVAC business remains strong and is gaining momentum, aided significantly by data center construction and in Asia continued demand from data center, along with traction on the team's regional outgrowth initiatives. Turning to margins. Adjusted EBITDA margin in the quarter for PES was 20.5% or 16.2% excluding refunds. This reflects weaker performance in the residential HVAC aftermarket due to greater caution in the channel and pockets of elevated distributor inventory as well as underperformance in pool distribution. Orders in PES for the second quarter were up 3.5% on a daily basis, with strength in commercial HVAC largely offset by weakness in residential HVAC and pool. Book-to-bill in the quarter for PES was 1.0. July orders for PES were up 5.4% on a daily basis versus the prior year period. Turning to the outlook. We are making some updates to reflect the dynamic environment. Before reviewing the specifics, I'll make a few high-level comments. We're very encouraged by the positive order momentum we're seeing, which is broad-based with growth in all 3 segments. We also continue to make progress paying down our debt and expect to be below 3x net debt leverage in the second half, an important milestone in our delevering journey. On Slide 10, the table on the left presents our principal guidance assumptions for 2026 as of today's update compared to our prior guidance when we reported first quarter results. The first column is our guidance provided on our first quarter call. The middle column is for reference and provides our current view on operating performance, excluding the impact of refunds, which is comparable view to our guidance at first quarter. The third column incorporates the benefit of refunds, which are now incorporated into our guidance. Our guidance now reflects an expected $48 million of refund benefits to EBITDA or $0.57 per share. This includes $32 million recorded in the second quarter and $8 million to be recorded in each of the second half quarters. Now returning to the table on this slide. Starting with sales, our guidance is unchanged at $6.2 billion and 4.5% growth. It now factors stronger growth in AMC, offset by weaker assumed growth in PES and IPS. Shifting to the margin outlook. Our adjusted EBITDA margin is now forecast to be 22.1% for this year or 21.3%, excluding the impact of refunds. The decline in our margin outlook, excluding these refunds, is being driven by 3 factors: one, a longer time line to realize planned productivity gains, in some cases, to prioritize service levels; two, a lag in price realization relative to a faster pace of inflation; three, modest mix impacts related to our revised segment growth outlooks. Regarding longer lead times to realize planned productivity savings, in some cases, we are slowing productivity actions to prioritize growth, particularly in AMC. In other cases, we are adding incremental conservatism on the time it takes to realize savings from our productivity actions. The last 2 factors, inflation and segment sales mix tend to be shorter cycle and now reflect the latest market conditions. Regarding inflation, in particular, all of our segments are seeing higher material, freight and energy costs in excess of our prior forecast. Further down in the table, we also outlined relevant below-the-line items, which are fairly consistent with prior guidance. Though I will flag our lower adjusted effective tax rate, primarily resulting from the regional mix of earnings in Q2 and benefits from our tax planning strategies. These assumptions resulted in an adjusted earnings per share guidance midpoint of $10.60, which is unchanged from our prior view. Given we are now halfway through the year, we have also narrowed our adjusted EPS guidance range to $10.35 to $10.85. For 2026, our cash flow guidance is now $600 million, down $50 million versus our prior target. The change primarily reflects improved order strength since we originally set our guide, which has become increasingly weighted to AMC, requiring incremental working capital investments. We are also assuming a more measured pace on executing our working capital reduction initiatives in light of the higher growth trajectory. Our healthy cash generation continues to enable good progress in paying down our debt, and we expect to see net debt leverage below 3x in the second half. Finally, regarding tariffs, the transition from Section 122 to announced Section 301 tariffs is minimal and is factored into our guidance. We continue to monitor this situation as it is rapidly evolving. On Slide 11, we provide more specific expectations for our performance by segment on revenue and adjusted EBITDA margin for third quarter and for the full year. For reference and comparability to our prior outlook, we are providing our margin assumptions for third quarter and the full year, both including and excluding IEEPA refund impacts. I will reference values, excluding IEEPA tariff refunds in discussing this slide. First, a few dynamics to note for the third quarter. In AMC, we expect sales to be modestly lower sequentially, reflecting some project activity that moved out of the quarter, including some that pulled into second quarter and some that shifted to fourth quarter. These product shifts, which carry favorable mix, contribute to a modest sequential margin decline in third quarter, followed by a step higher in fourth quarter. Despite these shifts, big picture, we believe AMC's margins have stabilized and expect the segment's second half margins to be above first half. We expect further margin expansion in AMC as we move through next year, but we are not providing any further guidance in that regard at this time. Our fourth quarter revenue outlook for AMC is now also benefiting from $15 million of ePOD sales. As a reminder, we have been waiting for build schedules tied to our initial ePOD orders to firm and had expected the majority of these sales to impact 2027 with some spillover into 2028 and potential for a modest amount of revenue to be recorded this year. We plan to provide further updates on the cadence of ePOD revenues when we have better clarity. Turning to IPS. We expect sales and margins to be higher in the second half versus the first half, reflecting orders performance and project shipment timing. However, within the back half, we do see sales and margins being modestly higher in fourth quarter versus in third quarter. For PES, sales and margins are expected to rise sequentially, largely due to normal seasonality. As a reminder, third quarter is the typical seasonal high point for PES margins, and we expect this year to follow that historic pattern and step down sequentially in fourth quarter. This year, we expect that fourth quarter step down to be larger because we anticipate less high-margin pool distribution prebuy activity than in a typical year given apparent destocking in the pool distributor channel. Now let me flag some annual assumptions that are changing. For AMC, we are raising our annual sales growth guidance to low double digits from high single digits, consistent with the segment's strong orders performance, along with the addition of the $15 million of ePOD revenue expected in the year. However, we are lowering the back half margin expectation due largely to the factors I covered earlier in the presentation. For IPS, we are lowering our annual sales growth guidance to low single digits from mid-single digits, primarily reflecting a weaker outlook for our large projects business, primarily tied to prior year metals and mining projects rolling off. Encouragingly, as I mentioned earlier, recent large project momentum has improved, though the benefits are likely to accrue in 2027. These headwinds are temporarily muting the benefits we are seeing from a recovery in short-cycle industrial markets. Shifting to margins. Our margin outlook for IPS is down about 80 basis points versus our prior assumption. Just under half of this decline is related to the lower top line outlook, and the remainder is associated with the factors I discussed earlier that are driving our enterprise EBITDA margin guidance revision. Finally, for PES, we are lowering our sales growth guidance to a flat to low single-digit decline. The change primarily reflects weaker residential HVAC and pool distribution markets that are mix accretive to the segment, partially offset by a stronger outlook for the commercial HVAC market. Our adjusted EBITDA margin outlook for PES is now expected to be about 1 point lower versus our prior assumption, reflecting higher inflation, lower volumes, less productivity and weaker mix. Before we open it to questions, I want to take a minute to reflect on the outlook for our business. For those who have been following us for some time, you know we have been focused on growth and deleveraging. Our order growth is approaching double digits, and our leverage is tracking to get below 3x in the back half. This trajectory should provide value creation opportunities for all our stakeholders, our customers, our associates and our shareholders. And with that, operator, we are now ready to take questions. Operator: [Operator Instructions] The first question comes from Mike Halloran with Baird. Michael Halloran: Welcome, Aamir. Looking forward to working with you. Aamir Paul: Likewise. Thank you. Michael Halloran: So a couple of questions here. First, can we start kind of where you left off there, Rob. The order trends have been really good for a chunk of quarters here, even if you exclude the chunk ePOD orders. The revenue has lagged. A lot of the commentary you've had in the prepared remarks was setting up for 2027 with longer cycle type projects that are coming in. So maybe you can help put in context when you start thinking that the orders and revenue numbers can start converging. It feels like you feel cumulatively good about what the momentum on the orders look like. July seems to support that. And then any moving pieces that you think will prevent you from getting there as we exit this year into next year? Robert Rehard: Yes, Mike, thanks for the question. So first of all, orders certainly do look to be very strong. As you said, we exited Q2 in a very good place. We, again, in July, saw orders strength at 7% overall for the business. So that's very good. There are some things that are lagging in terms of the sales side. I mean from an IPS perspective, we are seeing the large project activity, as we said, in mining, in particular, that's certainly weighing down on some of the growth rates that we're seeing this year. But that's really a timing issue. It's really an air pocket, if you will. And it should absolutely free up as we move into '27. As I said on the call, we have about 20% higher shippable backlog in '27 at this time versus what we would have had at the same time last year. So that gives us quite a bit of confidence as we move into the back half of this year and move into '27. From a PES standpoint, certainly, lots of noise there, market-driven, but feel very good about the order rates we're now starting to see. I'll point out that in PES, we saw orders in the second quarter of about 5% -- I'm sorry, at about 6.7%. We're now moving to about a little over 5% in July. That's good to see continuation there. But that's more of a market issue. And then from an AMC perspective, we've talked about it 15% excluding data center in the second quarter, very strong. So we really -- and this is why we took up the back half of the year for AMC, the way that we did. We do see that there's an opportunity to perform a little better within the range, but we are going to be a bit measured as we move into the back half of the year. But again, we don't see any visible obstacles beyond the macro. Most end markets feel very good to us. And we do think there's some opportunity in some that are very good with some outgrowth momentum there, especially in the areas of discrete automation, which we're moving up our assessment there from mid-single digit to high single digit in the year. And then aerospace and defense from -- there, we're seeing that move stronger. Data center from the 20s to high 20s now because of that market strength. So again, across the board, we feel very good about the future and about '27 in particular, getting back to where we know we are entitled and where we should be. Michael Halloran: And then related then, maybe a similar thought process on margins and when you think you can get that more normal flow-through into the profitability line. Maybe a finer point on that, just specifically around when mix starts normalizing, when you think you catch up on price cost? And any nuance there? And I know people probably specifically care about the AMC segment with those comments. So any help you could give us would be great. Robert Rehard: Sure. We do think that from a forward progression standpoint on rates, on margins, in particular, in AMC, as you mentioned, absolutely expect that we will continue to make progress as mix improves, especially in some of those businesses that tend to be higher margin within that business, such as discrete automation and then data center will come through for the switchgear side of the business. Those things are going to certainly come as we exit this year and move into next year. From a rate progression standpoint, the way we're looking at it right now is if you take from a modeling perspective, if you take kind of the jump-off point from this year and use those rates as we exit the year and then assume a bit of progress on price productivity and, of course, volume, that's how I would model it going forward. It's going to -- it's a little bit dependent upon the inflation that we continue to see through the business, our price capture and our ability to be a bit more margin accretive as we move forward. We have to get past the point we are today. But at this point, that's kind of the directional guidance I would provide, but we'll certainly provide more detail as we move into next year. Operator: The next question is from Jeff Hammond with KeyBanc Capital Markets. Jeffrey Hammond: Aamir, welcome to the call and to Regal. So I want to really drill down on the service level issue. I'm wondering, one, do you feel like you're losing any share because your service levels are lighter? I think you mentioned AMC, but it's just a little surprising to see you lower IPS as we start to inflect on short cycle. Are you seeing those service level issues outside of AMC as well? Maybe just more color on this service level issue. Robert Rehard: Yes, sure. Thanks, Jeff. And let me be very clear. It is not that our service levels are declining. It's more to protect the service levels and continue -- but sometimes when you have the kind of growth that we're seeing flow through the business, in particular, in AMC, we would look to slow down some of those productivity programs so that we can ensure that those service levels maintain. We have zero instances of service levels declining though. And outside of AMC, it's more conservatism on timing than it is the service level protection. Aamir Paul: The only thing I would add, and it's week 5, so there's still a lot for me to learn. But as we looked at this, I think one of the assessments that was made was we're seeing more growth than even the teams were projecting from an order standpoint. And given this team has been working so hard to secure that, we wanted to make sure we didn't disrupt anything. Now some of these planned moves were part of sort of scheduled consolidation of our footprint. And we decided to make a choice to say, look, let's make sure we get the growth curve right. So that's just strategically how we would thought about it and reset that timing a little bit. Jeffrey Hammond: Okay. Great. And then just on ePOD, can you just talk about the new facility ramp? It sounds like you're going to ship some, so that's good. You talked, I think, initially about margin profile. Are you thinking about the ePOD business? Are you thinking about that any differently? And then visibility on when you would see additional orders? I think you've been talking about 4Q, 1Q, but maybe just talk about the pipeline there. Robert Rehard: Yes. First of all, let me -- I'll kick this off as it relates to the facility. It's on schedule. The infrastructure is nearly complete. The leadership team has been hired. We're in the process of ramping up direct labor. So we're on track to be operational in time to support customer production schedules. So we're very close to being capable of producing at this time. As it relates to the margin profile and the -- we're still assuming at this time, since we haven't produced ePOD yet that our prior projections are still on track, which we've communicated was approximately 20%. And then as you look forward and look to additional ePOD orders, we have said that we might expect something on that front, maybe late in the year or early next year to those customers. And Aamir, you may have some additional commentary on that front. Aamir Paul: Yes. Thanks, Rob. Look, if you step back, we were invited to enter this space through customer relationships we've had in Thomson Power for some time. And as you know, this is simply about time to power. The labor issues in construction are such that modular delivery allows for time to power to be accelerated. And so these customers, and there are a set of them asked us to enter the space because they weren't satisfied with the quality and delivery they were getting, and they've had that relationship with us. Now we've been working with those customers to lock design that's done. And those customers alone have a pipeline that we can scale with. Of course, once we get through the first set of deliveries, we'll assess our profitability, as Rob mentioned, and also look at sort of how much we want to expand outside of those set of customers. But that available volume even within that set can allow us to grow. The key is that we understand the pacing of that from their standpoint and our standpoint. Operator: The next question is from Kyle Menges with Citigroup. Kyle Menges: And Aamir, I look forward to working with you. Maybe starting just on the data center orders in the quarter. I mean it didn't seem like much. And -- I mean, I'd just love to hear an update on the pipeline of traditional switchgear. I think last quarter, it had been around $600 million. So I'm just curious maybe why we haven't seen more conversion on that pipeline over the last couple of quarters and just how to think about that going forward? Robert Rehard: Well, first of all -- and thanks, Kyle, for the question. We do see switchgear growing at market levels and have that pipeline to support for sure. So from a switchgear standpoint, we still expect that this year, we should be around $180 million in switchgear moving higher than that next year, maybe as much as $240 million or so, $250 million next year. So switchgear is very much on track, and we feel very good about that. And as we move through the remainder of this year, as I said, the ePOD, we did not expect to get anything from an order standpoint. Our switchgear funnel still remains around the same level as what we've communicated previously. So that really hasn't changed. Kyle Menges: Got it. And then just curious on the July orders. It sounds like decelerated a little bit versus the second quarter. Would just be helpful to unpack the July orders, maybe what you're seeing by segment and what's decelerating versus accelerating perhaps? Robert Rehard: Yes. So really, it's just AMC primarily that's decelerating and that really is just timing. We've got -- it's a project business. It's very lumpy. You can see movement up and down in AMC for sure, as you go through a particular quarter. But we still feel very good about the backlog and the order rates that we see. From -- the other segments, we feel very good. We saw IPS accelerate. So that was great to see. And then PES, we -- as I said before, PES also is starting to show a little bit of strength as we move through July. So feel good about that as well. There's no markets that we feel that based on July results, we would change our perspective as we look towards the back half of the year. Things are very much aligned to our expectations. Operator: The next question is from Nicole DeBlase with Deutsche Bank. Nicole DeBlase: Welcome, Aamir, looking forward to working with you. I guess maybe just starting with the guidance change. You guys are embedding a step-up to 5% growth in the second half versus, I think, 3% in 2Q. I know orders have been better, which helps provide confidence, but the comp is a bit tougher relative to the first half. So just thinking through like the level of confidence that you guys have in the second half outcome and if you've embedded any sort of contingencies to make that guidance a bit more conservative. Robert Rehard: Well, certainly, the orders underpin the confidence that we see as we move into the back half. And the step-up is very much informed by what we're seeing on those order rates and the backlog, the shippable backlog, in particular, as we set up both Q3 and Q4. So there is additional upside opportunity for sure as we move through the back half of the year. Where we saw the greatest change from a positive perspective would be AMC. We did step down both IPS and PES. But again, feel very good about the back half with, as I said, opportunity in the range -- within the range. Nicole DeBlase: Okay. And then maybe just if we could put a finer point on price cost. How would you think about what's embedded in the second half? Like is price cost still a headwind throughout both 3Q and 4Q? And have you already taken pricing actions necessary to get back to price/cost neutral and whether that happens in the second half or more in 2027? Robert Rehard: Right. So we absolutely expect modest headwinds in the second half as it relates to price cost. And it's really around the inflation side on price/cost. There's the price tariff recovery, which we still see that we'll be margin neutral by the end of the year. The price/cost, we do expect that we will be a bit behind from a price/cost standpoint. But again, it's very hard to size. It's very much dependent upon the rate of inflation and the level of inflation flowing through the business as well as other mitigating actions that we can take. But we are absolutely implementing price increases. We have scheduled price increases as we move through the back half of this year, have been implementing price increases along the way as we move through Q2 and do that consistently. even as much as adding surcharges in certain cases where when you've got the war going on in oil and gas doing what it's doing and its impact on resins and the like, sometimes you have to surcharge things. But bottom line is, look, we're going to continue to execute our discipline around price cost, and we feel good about what we have embedded in the back half, and we will continue to raise prices to ensure that we can get back to a reasonable margin on those areas where we're seeing the most pressure. Aamir Paul: And the only thing I would add is just on the channel side, there is specific timing effects here, right, because we have a mechanism where it takes a certain amount of time for that price to flow through. So we can even work with our partners to announce it. But by the time it shows up in the sell-out numbers, there's a lag, whereas the inflation numbers are pretty much immediate. So there's a timing in terms of understanding what we're chasing in terms of net coverage number, as Rob said. And then there's the timing of the effect of the increases we've put in the market. And so both of those are factors that we're working through. Operator: The next question is from Tomo Sano with JPMorgan. Tomohiko Sano: Congratulations, Aamir, for a new role. As you ramp into the CEO role, could you share your first 100-day priorities and where you expect to spend the most time, customers, operations, portfolio, talent and capital allocation? Aamir Paul: That's a pretty good list you have there. No, look, I mean, in all seriousness, I have sectorial experience in many of the businesses, but I think it's really important to do exactly what you just mentioned, which is get out there and meet customers, meet partners. We have the privilege, in some cases, of decade-long relationships with our channels and end customers and just get their perspective. What are we doing well? What can we do better? Where are we best-in-class and where are we chasing best-in-class. We have gone through a lot of consolidation work as we went through the acquisitions and portfolio changes. So culture, even the teams and understanding where we are on that and how we move towards one Regal Rexnord and the solutions we can provide. So that means spending time in region with our teams. And then we talked about some of these factory consolidation moves and our execution on that front. Getting an industrial company to get into growth mode is exciting, but it's a step function change in how you operate, so making sure we're ready for that. So yes, a lot of time on the road with Rob Barry, I will also be carving out time to come meet with our investors and analysts, and I look forward to spending time with many of you as we do that. But understanding the business through the lens of our people, our customers and our operations is priority #1. Tomohiko Sano: And how does your experience running Schneider's North American business shape your view of eVTOL robotics, including humanoid and data centers? And now that you're in seat, how has that influenced your [indiscernible] priorities? Aamir Paul: Yes, that's a great question. If you look at my career, I was at Dell and then I went to Schneider. And when I joined Schneider in 2013, the way we talk about energy technology today and energy being intertwined with data centers was not as obvious. Certainly, to me, it may have been to sort of some folks in Silicon Valley. But for me, watching that journey and things going from sort of not being obvious to becoming so critical was an interesting view. And what attracts me to Regal is not only do we have a footprint today in exciting parts of our business, but we are building the foundation layer for tomorrow. If you think about the biggest application of AI and physical AI and the introduction of robotics, the fact that we are such a core part of those systems is terribly exciting. So I've had already the opportunity to meet with the CEO of one of the largest U.S. robotic companies, and I plan to go down to Austin and spend some time with them. And same thing on the eVTOL side. Those are longer cycle things, but it's great to see us on the ground floor co-engineering those solutions. And those markets will develop slowly until they happen overnight, and we plan to be ready. Operator: The next question is from Tim Thein with Raymond James. Timothy Thein: Welcome, Aamir. Maybe Rob, just on IPS, the guidance for the third quarter effectively flattish revenue sequentially. We talked a lot about some of the building momentum in the order board and some of the short-cycle indicators. So is that a -- is there a seasonal element to that? Or what would you kind of highlight in terms of why we wouldn't maybe see a little bit more sequential acceleration there on the top line? Robert Rehard: Yes. It's really -- there isn't a lot of seasonality within IPS. It's fairly minimal. But distribution, we'd say on that side, we expect that to be again, relatively -- improving relative to Q2. So short cycle, we expect to be a positive in the third quarter. We think that it's somewhat offset a bit by ag or machinery off-highway and then other projects are certainly -- the timing on projects are certainly weighing, but we do see a bit stronger activity as we move from third quarter to fourth quarter for IPS. So that -- we do see some improvement as we move forward as some of those projects start to flex upward and don't have any reservations on that front. And from a margin perspective, it's -- there is a bit of inflection in the margins in third quarter. That's just all volume and mix of the volume that you've been talking about. Some of the higher-margin businesses shifted from third quarter to second quarter. And so that also happened to -- within the IPS segment. Timothy Thein: Okay. And Aamir, I know it's early days here, but what the cross-sell has been one of the opportunities that your predecessor was really kind of hitting on and that being a huge opportunity for Regal. And your -- what you've seen thus far, I mean, how do you view that opportunity of just kind of the 1 plus 1 equals 3 idea within Regal? Aamir Paul: I buy into it completely. And when I mentioned moving from the brands that we're so proud to have into one Regal Rexnord, that's exactly it. Now to make that happen, we need to keep working on the second or last stages of our integration efforts. For example, if you're a seller in one of our divisions, how easy is it and how quickly can you quote for another? And how quickly do our systems give you access to the right information or how quickly if you need a subject matter expert, can you get them on. So that's the internal sort of friction that we're trying to eliminate so that our salespeople can not only continue to service their existing customers but expand into those secondary lines. Now that's a lot easier when we have direct end user OEM relationships. And again, we're thinking differently about our sales structure. So that is an evolutionary process, but the opportunity and the math that has been shared on that, I completely buy into. Operator: The next question is from Joe Ritchie with Goldman Sachs. Joseph Ritchie: Welcome, Aamir. So I want to really kind of focus on your background, Aamir. So obviously, been at Schneider since 2013, last 4 years running North America. Last 4 years really coincided with like pretty acute pressures that we're seeing across the supply chain, a lot of inflation. I'm just curious like maybe you can highlight some of the things that you learned during that time frame that could be relevant as you're taking the seat at Regal Rexnord. Aamir Paul: I imagine many things, but a therapy session wasn't one of them. Look, as you said, it was an incredibly demanding period for not just us, the entire sector because we were coming out of the COVID recovery and then we had sort of this next revolution of AI and everything that, that's brought since 2022. So scaling, right, was the name of the game. And then you couple that with last year's Liberation Day and localization became even more important. So there were a lot of moving parts. And look, I could spend a lot of time talking about this and happy to when we meet. But if I distill it down to 3 things, take care of the customer first, deliver, get your supply chain right, right? Do not disappoint on that front. Second, make sure that your long-term strategy, you're super clear on because you can't play whack-a-mole. If you start playing reactive in terms of sourcing or supply chain, you're just going to be in trouble, right? Like guess which country is going to have a higher tariff is not a winning strategy. And then third, structurally make sure that once you get that right, you earn the right to price to value, right? And I think that sequence of operation isn't always perfect, but it's a lot harder to go ask customers for price if you're not delivering or you're messing up their supply chain. So win the delivery battle, then make sure you're structurally doing the right things and then that gives you the platform to deserve the price that your delivery affords you. Again, we could go a lot deeper, but I think that those are the scars I carry with me, and that's what we're trying to replicate here. Joseph Ritchie: That's super helpful. And yes, I look forward to definitely going deeper. Just my one quick follow-up. You guys have talked about this data center opportunity and how it kind of -- for a lot of the investors that have paid attention to Regal Rexnord for a long period of time, it seemingly kind of came out of like nowhere, right? And the way -- I guess, as you're thinking about this opportunity and the relationships that you already have with hyperscalers, colocators, how are you thinking about potentially like scaling that business and bringing some of that commercial culture that you had at Schneider to Regal? Aamir Paul: Well, starting with our portfolio is different. In fact, some of the solutions we deliver integrate content from Tier 1 providers like ABB, Schneider, Eaton and others. But I think there's a lot -- back to your first part of your question, there's a lot right now where the hyperscalers just want reliability and they have such acute time to power schedules that they want partners they can count on to deliver. The shift from stick build to modular is very much driven by that labor arbitrage issue that modular allows you to get right. Then you come to the relationships Regal already has, which invited them to join this business. I think if we can prove, and that's our intention that we can do this more effectively, scale with higher quality, make sure we get the basics right. The opportunity is certainly there, but we want to make sure it also works for us in terms of the profit profile, given our content is not as high as some of the other players in the space. And then the last element of this that's exciting is there are elements in air moving, especially in PES that we can add to this. Because not all of these modular solutions are going to be liquid cooled. So it's a combination, right? We want to make sure we can scale what we're building, demonstrate that it's best-in-class, demonstrate that works for us from a profitability standpoint. And then because we built it for a set of customers, we'll first compete for their share of wallet. And if for some reason, that doesn't take up our capacity, then, of course, there are other market opportunities to pursue. But there is a sequence of operations there with a lot of stage gates that we have to cross. Operator: The next question is from Chris Dankert with D.A. Davidson. Christopher Dankert: I wanted to dig in just a little bit on the project order dynamic in the project activity in IPS rather. Have we expected to backfill those? Did some of that just not renew? Maybe can we quantify how big that project roll-off headwind is? Anything you can kind of give us there? Robert Rehard: Yes. It's -- first of all, IPS, it's about -- 25% of IPS is projects or longer cycle. So we are backfilling. So we certainly see progress, but a lot of that is coming in '27. But it is -- and as I said earlier, it's a little bit more just an air gap that we see as timing related. We see it fully recoverable as you move into '27 come through '26. And that really is -- all there is to it. There really isn't much more than that. Overall, the order activity is very good, but it really, again, is 2027 delivery. Christopher Dankert: Appreciate it. And then just briefly on rare earths, and apologies if I missed it already. It sounds like we're still fighting on the price cost side. But just on rare earth magnet availability, how are we set on that front? Do we have supply that we need to deliver on time? Robert Rehard: Well, as it relates to commercial uses, both our sourcing and mitigation actions are progressing, and we believe we will be mostly mitigated within this quarter. However, it's important to note that the pace of progress for approvals for defense applications, that's where it really remains slow. So -- and not only that, but you couple that with the fact that the demand environment on this front is improving, that exacerbates the issue. So at this point, the primary risk is for us not being able to maybe participate in servicing the additional demand at the level we would like to and less an implication on our current backlog. Operator: The next question is from Christopher Glynn with Oppenheimer. Christopher Glynn: Just a quick one, and we have a follow-up. But I was wondering the remaining $0.18 tariff refund benefit in the guide. Is that entirely in the third quarter? Robert Rehard: The tariff refunds are split, it's $16 million, $8 million in each quarter. Operator: This concludes our question-and-answer session, and the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Regal Rexnord (RRX) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Regal Rexnord (RRX) is back in focus after its second quarter 2026 report, which featured higher sales, higher net income and updated full year earnings guidance that narrows expected GAAP EPS. See our latest analysis for Regal Rexnord. The latest earnings update and narrowed GAAP EPS guidance arrived after a sharp pullback in Regal Rexnord's share price, with the 7 day share price return down 13.27% and the 30 day share price return down 17.17%. However, the year to date share price return is up 21.83% and the 1 year total shareholder return is 29.14%, which suggests longer term holders have still seen gains. If Regal Rexnord's recent swing has you thinking about where else growth and automation trends could play out, it may be worth scanning 37 robotics and automation stocks. After a double digit pullback following higher sales, higher net income and narrowed GAAP EPS guidance, Regal Rexnord now sits at a different entry point. Does that reset leave the risk reward skewed toward buyers or caution? Regal Rexnord's most followed narrative pegs fair value at $252.40 versus the latest close at $178. That gap is built on specific growth and margin expectations rather than sentiment alone. Read the complete narrative. Want to see what is sitting behind that fair value gap for Regal Rexnord? The narrative focuses on compounding revenue, rising profitability, and a future earnings multiple that depends on execution in data center and automation projects. Curious which specific growth, margin and earnings paths would need to align to support that price? Result: Fair Value of $252.40 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Regal Rexnord’s story can shift quickly if rare earth magnet supply or data center project timing worsens, because both affect higher margin products and backlog conversion. Find out about the key risks to this Regal Rexnord narrative. With Regal Rexnord presenting both an upside narrative and some clear areas of concern, this is a moment to act quickly and test the thesis against your own expectations. To see how the key positives compare with the main issues investors are watching, review the 5 key rewards and 2 important warning signs If Regal Rexnord is already on your radar, do not stop there. Use this moment to widen your watchlist with companies that match your risk and return preferences. Spot potential bargains early by scanning companies flagged as high quality and overlooked using the screener containing 21 high quality undiscovered gems. Build a short list of resilient businesses by filtering for companies in the 83 resilient stocks with low risk scores that score well on downside protection. Strengthen your core holdings with companies screened for healthy finances through the solid balance sheet and fundamentals stocks screener (48 results). This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include RRX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Regal Rexnord Corporation? Here are five stocks we like better. Second-quarter performance improved: Orders rose 8.8% year over year, while enterprise sales increased 4.2%, including 3.3% organic growth. Data centers, automation, commercial HVAC and energy markets were strong, but residential HVAC and pool demand remained weak. Automation & Motion Control led growth with 15.6% organic sales growth and 17.1% higher orders, supported by data-center, aerospace and automation demand. Longer-cycle projects are building backlog, although some project timing will cause modestly lower third-quarter sales. Full-year sales and EPS guidance was maintained, but profitability expectations weakened: Regal Rexnord lowered its adjusted EBITDA margin outlook and free-cash-flow guidance due to inflation-related pricing lags, slower productivity savings and higher working-capital needs tied to AMC growth. MarketBeat Week in Review – 07/06 - 07/10 Regal Rexnord (NYSE:RRX) reported second-quarter results marked by higher orders, organic sales growth and continued momentum in data center, automation and energy-related markets, while lowering certain segment outlooks amid inflation, pricing lags and weakness in residential HVAC and pool markets. The company also introduced Aamir Paul on his first earnings call as chief executive officer. Paul, who joined Regal Rexnord on July 1, said his initial focus has been listening to employees, customers, channel partners, suppliers and investors. He previously held leadership roles at Dell Technologies and Schneider Electric. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling This Under-the-Radar Industrial Is Quietly Powering AI “I came to Regal Rexnord because I see tremendous opportunities across the company’s portfolio, strong channel positions, manufacturing scale, and healthy balance sheet,” Paul said. He cited factory automation, aerospace and defense, air moving, robotics, eVTOL and data centers as attractive areas for the company. Daily orders increased 8.8% from the prior-year period during the second quarter, or 8.1% excluding data center activity, according to Chief Financial Officer Rob Rehard. Orders excluding the company’s consumer-oriented residential HVAC and pool businesses rose at a low-double-digit rate. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High 3 Energy Stocks to Buy as AI Power Demand Surges—and 2 to Avoid Enterprise sales increased 4.2% year over year, including 3.3% organic growth. Excluding residential HVAC and pool, sales rose 6.1%. Rehard said growth was broad-based, with notable strength in data centers, commercial HVAC, discrete automation and energy markets. Adjusted gross margin was 39.8%, or 37.8% excluding $32 million in IEEPA tariff refunds recorded during the quarter. Adjusted EBITDA margin was 23.5%, or 21.5% excluding the refunds. Adjusted earnings per share totaled $2.99, or $2.60 excluding the refund benefit. The latter figure represented 5% adjusted earnings growth from the prior year, Rehard said. → No Hangover: Revisiting Microsoft One Week After Earnings Adjusted free cash flow was $154 million, improving sequentially on higher EBITDA, lower interest costs and normal seasonality. Rehard noted that second-quarter 2025 cash flow had benefited from $369 million of proceeds from the company’s accounts-receivable securitization program. Automation & Motion Control, or AMC, posted 15.6% organic sales growth in the second quarter. The segment benefited from data center, discrete automation, aerospace and defense demand. Orders rose 17.1%, or 15% excluding data center, while book-to-bill was 1.02. AMC adjusted EBITDA margin was 21.1%, or 19.9% excluding tariff refunds. Rehard said volume gains were partly offset by growth investments. He added that nearly half of AMC’s first-half order growth was tied to longer-cycle projects and blanket orders expected to support revenue in 2027 and, in some cases, 2028. The company expects AMC sales to be modestly lower sequentially in the third quarter because certain project activity moved out of the period, with some shifting into the second quarter and some into the fourth quarter. Regal Rexnord expects $15 million of ePOD revenue in the fourth quarter. The company’s new ePOD production facility is nearing completion and is expected to be ready to support customer production schedules. Management maintained its prior estimate that ePODs could carry an approximately 20% margin profile, though Rehard said the company has not yet produced an ePOD. Paul said the business was developed in response to customer demand for modular data-center infrastructure that can accelerate “time to power.” Industrial Powertrain Solutions, or IPS, recorded 2% organic sales growth, led by energy markets and power generation activity associated with data centers. Machinery off-highway markets, including agriculture, were an area of weakness. IPS daily orders rose 6.7%, with distributor-channel orders up 8%, short-cycle OEM orders up 4% and large-project orders up 8%. Its book-to-bill ratio was 1.06. Rehard said large project wins in metals and mining helped lift the segment’s shippable 2027 backlog by more than 20% compared with the level of its 2026 shippable backlog at the same time last year. Power Efficiency Solutions, or PES, saw organic sales decline 6.6% as residential HVAC and pool markets remained weak. Management attributed residential HVAC softness to housing conditions, consumer confidence and remaining pockets of elevated channel inventory. Commercial HVAC remained a source of strength, aided by data-center construction and regional growth initiatives. PES daily orders rose 3.5% in the second quarter, as commercial HVAC strength was largely offset by residential HVAC and pool weakness. The segment’s adjusted EBITDA margin was 20.5%, or 16.2% excluding tariff refunds. Regal Rexnord maintained its 2026 sales outlook of $6.2 billion and 4.5% growth. The outlook now assumes stronger AMC growth but weaker contributions from IPS and PES. The company expects adjusted EBITDA margin of 22.1% for the full year, or 21.3% excluding tariff refunds. The lower ex-refund margin outlook reflects a longer timeline for productivity savings, price realization lagging inflation and revised segment mix assumptions. Management now expects $48 million of tariff-refund benefits to EBITDA, or $0.57 per share, for the year. This includes $32 million recognized in the second quarter and $8 million expected in each of the final two quarters. Adjusted EPS guidance was narrowed to $10.35 to $10.85, with an unchanged midpoint of $10.60. Free-cash-flow guidance was lowered by $50 million to $600 million, primarily because higher growth in AMC is expected to require additional working-capital investment. Rehard said the company expects net debt leverage to fall below three times during the second half of 2026. Regal Rexnord Corporation (NYSE: RRX) is a global industrial manufacturer specializing in electric motors, power generation equipment and automated motion control systems. The company designs, engineers and produces a broad portfolio of products that includes energy-efficient electric motors, variable frequency drives, gearboxes, couplings, bearings and power transmission components. These offerings support critical applications in industries such as heating, ventilation and air conditioning (HVAC), refrigeration, data centers, water treatment, food and beverage processing, mining, oil and gas, and material handling. The company's operations are organized into multiple business segments that address distinct customer needs. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Regal Rexnord Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Enterprise daily orders grew 8.8% in Q2, driven by broad-based strength in secular markets like data centers, aerospace, and discrete automation. Management intentionally slowed certain productivity initiatives to prioritize service levels and capture higher-than-expected growth, particularly within the AMC segment. AMC organic sales surged over 15%, reflecting successful execution of backlog and market share gains in high-growth sectors. PES performance was hampered by weakness in residential HVAC and pool markets, attributed to a soft housing market and excess channel inventory. IPS growth was led by energy markets and data center demand, though overall segment performance was muted by the roll-off of large mining projects. The company is successfully deleveraging, expecting to reach a net debt leverage ratio below 3x in the second half of 2026. New CEO Aamir Paul emphasized a 'listen and learn' phase focused on leveraging the company's manufacturing scale and strong channel positions. Full-year 2026 sales guidance remains at $6.2 billion, with stronger AMC growth offsetting softer outlooks for PES and IPS. Adjusted EBITDA margin guidance was revised to 22.1% to account for a lag in price realization against inflation and delayed productivity gains. Free cash flow guidance was lowered to $600 million to fund incremental working capital required by the higher growth trajectory in AMC. Management expects a significant step-up in 2027 performance, supported by an IPS shippable backlog that is 20% higher than the prior year's levels. The ePOD modular data center solution is expected to contribute $15 million in revenue in Q4 2026, with a larger ramp anticipated for 2027. Guidance now incorporates $48 million in IEEPA tariff refunds, with $32 million realized in Q2 and $16 million scheduled for the second half. Higher-than-anticipated inflation in material, freight, and energy costs is creating a temporary headwind to margin expansion. Rare earth magnet supply remains a constraint for defense applications due to slow regulatory approval processes, potentially limiting upside in that sector. Section 232 tariff changes caused 'incremental friction' in the PES segment as OEMs delayed orders to reevaluate production plans. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained that the gap is primarily due to timing, with a significant portion of current orders tied to long-cycle projects for 2027 delivery. IPS is experiencing a temporary 'air pocket' as old mining projects roll off before new project wins begin shipping next year. CEO Aamir Paul clarified that the company chose to delay certain footprint consolidations to ensure they did not disrupt the accelerating growth curve. The priority is to maintain customer trust and delivery reliability while transitioning the organization into a higher growth mode. The new facility is on schedule and nearly operational, with the first $15 million in revenue expected in Q4 2026. Management expects additional ePOD orders late this year or early next, noting that hyperscalers are seeking modular solutions to accelerate 'time to power'. Management acknowledged a lag in price realization due to contractual mechanisms with channel partners, while inflationary costs are immediate. They expect to remain in a modest price/cost headwind for the second half and expect to be a bit behind on price/cost neutrality by year-end, though they are implementing surcharges and price increases to mitigate the impact.

Regal Rexnord (RRX) came out with quarterly earnings of $2.99 per share, beating the Zacks Consensus Estimate of $2.6 per share. This compares to earnings of $2.48 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +15.00%. A quarter ago, it was expected that this maker of controls for electric motors would post earnings of $2.11 per share when it actually produced earnings of $2.17, delivering a surprise of +2.84%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Regal Rexnord, which belongs to the Zacks Manufacturing - General Industrial industry, posted revenues of $1.56 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.48%. This compares to year-ago revenues of $1.5 billion. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Regal Rexnord shares have added about 56.8% since the beginning of the year versus the S&P 500's gain of 13%. While Regal Rexnord has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Regal Rexnord was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.92 on $1.59 billion in revenues for the coming quarter and $10.65 on $6.24 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Manufacturing - General Industrial is currently in the top 22% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Broadwind Energy, Inc. (BWEN), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 11. This company is expected to post quarterly loss of $0.01 per share in its upcoming report, which represents a year-over-year change of +75%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Broadwind Energy, Inc.'s revenues are expected to be $34 million, down 13.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Regal Rexnord Corporation (RRX) : Free Stock Analysis Report Broadwind Energy, Inc. (BWEN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Industrials products and automation company Regal Rexnord (NYSE:RRX) missed Wall Street’s revenue expectations in Q2 CY2026 as sales rose 4.2% year on year to $1.56 billion. Its non-GAAP profit of $2.99 per share was 15.7% above analysts’ consensus estimates. Is now the time to buy Regal Rexnord? Find out in our full research report. Revenue: $1.56 billion vs analyst estimates of $1.58 billion (4.2% year-on-year growth, 1.1% miss) Adjusted EPS: $2.99 vs analyst estimates of $2.58 (15.7% beat) Adjusted EBITDA: $366.6 million vs analyst estimates of $340 million (23.5% margin, 7.8% beat) Management reiterated its full-year Adjusted EPS guidance of $10.60 at the midpoint Operating Margin: 13.8%, up from 12.2% in the same quarter last year Free Cash Flow Margin: 9.9%, up from 8.4% in the same quarter last year Organic Revenue rose 3.3% year on year (miss) Market Capitalization: $14.65 billion Headquartered in Milwaukee, Regal Rexnord (NYSE:RRX) provides power transmission and industrial automation products. Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Regal Rexnord’s sales grew at an excellent 13.3% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers. We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Regal Rexnord’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.4% over the last two years. We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Regal Rexnord’s organic revenue was flat. Because this number is better than its two-year revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results. This quarter, Regal Rexnord’s revenue grew by 4.2% year on year to $1.56 billion, falling short of Wall Street’s estimates. Looking ahead, sell-side analysts expect revenue to grow 9.4% over the next 12 months, an improvement versus the last two years. This projection is noteworthy and suggests its newer products and services will spur better top-line performance. ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE. Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. Regal Rexnord has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.1%. This result isn’t too surprising as its gross margin gives it a favorable starting point. Analyzing the trend in its profitability, Regal Rexnord’s operating margin rose by 1 percentage points over the last five years, as its sales growth gave it operating leverage. In Q2, Regal Rexnord generated an operating margin profit margin of 13.8%, up 1.6 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead. Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions. Regal Rexnord’s EPS grew at an unimpressive 5.6% compounded annual growth rate over the last five years, lower than its 13.3% annualized revenue growth. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings. We can take a deeper look into Regal Rexnord’s earnings to better understand the drivers of its performance. A five-year view shows Regal Rexnord has diluted its shareholders, growing its share count by 63.2%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals. Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. For Regal Rexnord, its two-year annual EPS growth of 8.4% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point. In Q2, Regal Rexnord reported adjusted EPS of $2.99, up from $2.48 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Regal Rexnord’s full-year EPS to grow 18.6% from $10.18 to $12.08. We were impressed by how significantly Regal Rexnord blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed and its organic revenue fell slightly short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 8.1% to $202.26 immediately following the results. Is Regal Rexnord an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.

MILWAUKEE, Aug. 5, 2026 /PRNewswire/ -- Regal Rexnord Corporation (NYSE: RRX) 2Q Highlights Daily Orders Up 8.8% Versus PY Sales Of $1,558.4 Million, Up 4.2% Versus PY, Up 3.3% On An Organic Basis GAAP Net Income Of $116.8 Million Versus PY Of $79.6 Million, Up $37.2 Million Or 46.7% Versus PY Adjusted EBITDA Of $366.6 Million Versus PY Of $329.7 Million, Up $36.9 Million Or 11.2% Versus PY 2Q 2026 Adjusted EBITDA Includes IEEPA Tariff Refund Benefit Of $32.0 Million Diluted EPS Of $1.74, Up 46.2% Versus PY; Adjusted Diluted EPS Of $2.99, Up 20.6% Versus PY 2Q 2026 Adjusted Diluted EPS Includes IEEPA Tariff Refund Benefit Of $0.39 Cash From Operating Activities of $176.6 Million; Free Cash Flow Of $154.1 Million Net Debt To Adjusted EBITDA (Including Synergies) Ended 2Q At 3.06x; Expect To Be Below 3.0x In The Second Half Of 2026 2026 GAAP EPS Guidance Range Narrowed To $5.42 To $5.92 2026 Adjusted EPS Guidance Range Narrowed To $10.35 To $10.85, Inclusive Of IEEPA Tariff Refund Benefits Worth $0.57 Per Share; Midpoint Remains $10.60 CEO Aamir Paul commented, "I am honored to serve as Regal Rexnord's sixth CEO and excited about the opportunities in front of us. I joined the Company because I believe Regal Rexnord is uniquely positioned to leverage its technology leadership, manufacturing scale, and deep customer relationships to address relevant needs across many attractive end markets. In particular, the development of solutions in eVTOL, robotics and data center are exciting frontiers where Regal Rexnord can play a meaningful role. To start, I am spending my time learning the business. Ultimately, the goal is to create a sustainable platform for growth, while also delivering predictable results along the way." CFO Rob Rehard commented: "Regal Rexnord delivered solid second-quarter performance. Our mid-term sales growth outlook strengthened further, with enterprise daily orders increasing 8.8% year over year, led by 17.1% daily orders growth in AMC. This momentum reflects improving end markets and continued traction on our growth initiatives. Organic sales growth also accelerated, to 3.3%, despite greater-than-expected headwinds in Resi-HVAC, pool, mining and agriculture markets. Excluding IEEPA refunds, enterprise adjusted EBITDA margins were in line with expectations, despite incremental inflationary pressures, aided in part by incremental synergies; AMC margins improved sequentially and year over year; and adjusted diluted EPS increased versus the prior year." Rehard concluded, "Looking forward, our top line outlook remains unchanged. We are holding our adjusted EPS outlook range mid-point, including refunds. Our outlook also now reflects a longer timeline to realize planned productivity gains, in some cases to prioritize service levels. Additionally, we are experiencing a lag in price realization relative to a faster pace of inflation, and modestly unfavorable segment mix impacts. Importantly, these factors do not change our view of a strong and broad-based underlying demand environment. We continue to see positive order momentum across the business." Guidance Update We are narrowing our 2026 GAAP EPS guidance to a range of $5.42 to $5.92. We are also narrowing our 2026 Adjusted Diluted EPS guidance range to $10.35 to $10.85, which now includes expected IEEPA tariff refund benefits worth $0.57 per share. Our Adjusted Diluted EPS guidance range mid-point remains $10.60. Segment Performance Segment results for the second quarter of 2026 versus the same period of the prior year are summarized below: Automation & Motion Control (AMC) net sales were $477.7 million, an increase of 16.2%, or an increase of 15.6% on an organic basis. Growth was broad-based, but with particular strength in the data center, discrete automation, and aerospace & defense markets. Adjusted EBITDA margin was 21.1% of net sales or 19.9% excluding refunds. Industrial Powertrain Solutions (IPS) net sales were $669.4 million, an increase of 3.0%, or an increase of 2.0% on an organic basis. Growth was strongest in the energy market. Adjusted EBITDA margin was 27.1% of net sales or 25.9% excluding refunds. Power Efficiency Solutions (PES) net sales were $411.3 million, a decrease of 5.5%, or a decrease of 6.6% on an organic basis due to weakness in the residential HVAC and pool markets, which was partially offset by strength in the commercial HVAC market. Adjusted EBITDA margin was 20.5% of net sales or 16.2% excluding refunds. Conference Call Regal Rexnord will hold a conference call to discuss this earnings release at 9:00 AM CT (10:00 AM ET) on Wednesday, August 5, 2026. To listen to the live audio and view the presentation during the call, please visit Regal Rexnord's Investor website: https://investors.regalrexnord.com. To listen by phone or to ask the presenters a question, dial 1-877-264-6786 (U.S. callers) or 1-412-317-5177 (international callers) and enter 6542343# when prompted. Participants on the call will include Aamir Paul, CEO, and Rob Rehard, EVP & CFO. A webcast replay will be available at the link above, and a telephone replay will be available at 1-855-669-9658 (U.S. callers) or 1-412-317-0088 (international callers), using a replay access code of 1638161#. Both replays will be accessible for three months after the earnings call. Supplemental Materials Supplemental materials and additional information for the quarter ended June 30, 2026 will be accessible before the conference call on August 5, 2026 on Regal Rexnord's Investor website: https://investors.regalrexnord.com. The Company intends to disseminate important information about the Company to its investors on the Investors section of its website: https://investors.regalrexnord.com. Investors are advised to look at Regal Rexnord's website for future important information about the Company. The content of the Company's website is not incorporated by reference into this document or any other report or document Regal Rexnord files with the Securities and Exchange Commission. About Regal Rexnord Regal Rexnord's 30,000 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. The Company's end markets benefit from meaningful secular demand tailwinds, and include discrete automation, food & beverage, aerospace & defense, medical, data center, energy, residential and commercial buildings, general industrial, and metals and mining. Regal Rexnord is comprised of three operating segments: Automation & Motion Control, Industrial Powertrain Solutions, and Power Efficiency Solutions. Regal Rexnord is headquartered in Milwaukee, Wisconsin and has manufacturing, sales and service facilities worldwide. For more information, including a copy of our Sustainability Report, visit RegalRexnord.com. Forward Looking Statements All statements in this communication, other than those relating to historical facts, are "forward-looking statements." Forward-looking statements can generally be identified by their use of terms such as "anticipate," "believe," "confident," "estimate," "expect," "intend," "plan," "may," "will," "project," "forecast," "would," "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 expected market or macroeconomic trends, future strategic plans, and future financial and operating results. Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements in this communication include, without limitation: the possibility that 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 ("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; dependence on key suppliers and the potential effects of supply disruptions; fluctuations in commodity prices and raw material costs; 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 retain key executives and employees and risks associated with the transition of our new CEO; uncertainties regarding our ability to execute restructuring 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 our ability to effectively compete in the increasingly competitive global industries and markets; our 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 our ability to deliver on our sustainability commitments and/or to meet related investor, customer and other third party expectations relating to our 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, 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; prolonged declines 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; the Company's ability to identify and execute on future mergers and acquisitions ("M&A") opportunities or other strategic transactions; the impact of any such M&A 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; 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, and tax laws and regulations; risks associated with stock price volatility; and other factors that can be found in our filings with 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 communication 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. Non-GAAP Measures(Unaudited)(Dollars in Millions, Except per Share Data) We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We also periodically disclose certain financial measures in our quarterly earnings releases, on investor conference calls, and in investor presentations and similar events that may be considered "non-GAAP" financial measures. This additional information is not meant to be considered in isolation or as a substitute for our results of operations prepared and presented in accordance with GAAP. In this release, we disclose the following non-GAAP financial measures, and we reconcile these measures in the tables below to the most directly comparable GAAP financial measures: adjusted diluted earnings per share, adjusted income from operations, adjusted operating margin, adjusted net sales, adjusted gross margin, net debt, EBITDA, adjusted EBITDA, adjusted EBITDA (including synergies), interest coverage ratio, interest coverage ratio (including synergies), adjusted EBITDA margin, gross debt/adjusted EBITDA, net debt/adjusted EBITDA, net debt/adjusted EBITDA (including synergies), free cash flow, adjusted income before taxes, adjusted provision for income taxes, and adjusted effective tax rate. 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. Our management primarily uses adjusted income from operations and adjusted operating margin to help us manage and evaluate our business and make operating decisions, while the other non-GAAP measures disclosed are primarily used to help us evaluate our business and forecast our future results. Accordingly, we believe disclosing and reconciling each of these measures helps investors evaluate our business in the same manner as management. This release also includes non-GAAP forward-looking information. The Company believes that a quantitative reconciliation of this forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of this non-GAAP financial measure would require the Company to predict the timing and likelihood of future restructurings and other charges. Neither these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of the most directly comparable forward-looking GAAP measure is not provided. In addition to these non-GAAP measures, we use the term "organic sales growth" to refer to the increase in our sales between periods that is attributable to organic sales. "Organic sales" refers to GAAP sales from existing operations excluding any sales from acquired businesses recorded prior to the first anniversary of the acquisition and excluding any sales from business divested/to be exited recorded prior to the first anniversary of the exit and excluding the impact of foreign currency translation. The impact of foreign currency translation is determined by translating the respective period's organic sales using the currency exchange rates that were in effect during the prior year periods. 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Diamond Hill Capital, a First Eagle Investment Management company, issued its Q2 2026 investor letter for its “Mid Cap Strategy”. A copy of the Q2 2026 investor letter can be downloaded here. In the quarter, equity markets posted strong returns as resilient economic growth and robust corporate earnings supported investor sentiment, although AI-related companies continued to dominate market leadership. Technology was the strongest-performing sector, while industrials also advanced and energy lagged as oil prices declined. The Fund returned 7.92% and the Russell Midcap Index returned 13.83%. Health care holdings were the largest positive contributor, supported by strength across managed care, diagnostics, and life sciences. However, stock selection and an underweight position in information technology remained the main relative headwinds. The strategy maintained limited exposure to highly valued semiconductor and memory companies, reflecting concerns that current valuations assume an extended period of elevated AI spending. It also continued to assess software and services businesses individually based on how AI may affect their long-term competitive positions. Management emphasized higher-quality companies, attractive valuations, capital preservation, and durable long-term compounding while remaining cautious about elevated valuations, concentrated leadership, and the sustainability of the current AI investment cycle. Please review the Strategy’s top five holdings for its key selections. In its Q2 2026 investor letter, Diamond Hill Capital Mid Cap Strategy highlighted Regal Rexnord Corporation (NYSE:RRX) as a notable contributor. Regal Rexnord Corporation (NYSE:RRX) is a leading industrial company that offers sustainable power solutions, transmission, and control motion products. On August 4, 2026, Regal Rexnord Corporation (NYSE:RRX) closed at $220.04 per share, reflecting a market capitalization of $12.59 billion. Regal Rexnord Corporation (NYSE:RRX) posted a one-month return of -10.87%, while its shares gained 27.56% over the past 52 weeks. Diamond Hill Capital Mid Cap Strategy stated the following regarding Regal Rexnord Corporation (NYSE:RRX) in its Q2 2026 investor letter: Regal Rexnord Corporation (NYSE:RRX) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 51 hedge fund portfolios held Regal Rexnord Corporation (NYSE:RRX) at the end of the first quarter, up from 40 in the previous quarter. Regal Rexnord Corporation (NYSE:RRX) Q1 2026 sales increased 4.3% and 1.6% on an organic basis compared to Q1 2025. While we acknowledge the potential of Regal Rexnord Corporation (NYSE:RRX) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. In another article, we covered Regal Rexnord Corporation (NYSE:RRX) and shared a list of best industrial automation stocks to buy. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years. Disclosure: None. This article is originally published at Insider Monkey.

For the quarter ended June 2026, Regal Rexnord (RRX) reported revenue of $1.56 billion, up 4.2% over the same period last year. EPS came in at $2.99, compared to $2.48 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $1.58 billion, representing a surprise of -1.48%. The company delivered an EPS surprise of +15%, with the consensus EPS estimate being $2.60. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Regal Rexnord performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Revenues- Automation & Motion Control (AMC): $477.7 million versus the three-analyst average estimate of $463.99 million. The reported number represents a year-over-year change of +16.2%. Revenues- Industrial Powertrain Solutions (IPS): $669.4 million versus $676.94 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +3% change. Revenues- Power Efficiency Solutions (PES): $411.3 million versus the three-analyst average estimate of $433.02 million. The reported number represents a year-over-year change of -5.5%. Adjusted EBITDA- Industrial Powertrain Solutions (IPS): $181.4 million compared to the $178.38 million average estimate based on three analysts. Adjusted EBITDA- Automation & Motion Control (AMC): $100.8 million versus the three-analyst average estimate of $88.54 million. Adjusted EBITDA- Power Efficiency Solutions (PES): $84.4 million versus the three-analyst average estimate of $72.8 million. View all Key Company Metrics for Regal Rexnord here>>> Shares of Regal Rexnord have returned +4% over the past month versus the Zacks S&P 500 composite's +3.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Regal Rexnord Corporation (RRX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research