REGAL REXNORD CORP - Quarter Report: 2025 June (Form 10-Q)

Total Current Assets Net Property, Plant and Equipment Operating Lease Assets Goodwill Intangible Assets, Net of Amortization Deferred Income Tax Benefits Other Noncurrent Assets Total Assets$ $ LIABILITIES AND EQUITYCurrent Liabilities:Accounts Payable$ $ Dividends Payable Accrued Compensation and Benefits Accrued Interest Other Accrued Expenses Current Operating Lease Liabilities Current Maturities of Long-Term Debt Total Current Liabilities Long-Term Debt Deferred Income Taxes Pension and Other Post Retirement Benefits Noncurrent Operating Lease Liabilities Other Noncurrent Liabilities Equity:Regal Rexnord Corporation Shareholders' Equity:

Common Stock, $ par value, million Shares Authorized, million and million Shares Issued and Outstanding for June 30, 2025 and December 31, 2024, Respectively

Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss()()Total Regal Rexnord Corporation Shareholders' Equity Noncontrolling Interests Total Equity Total Liabilities and Equity$ $

See Accompanying Notes to Condensed Consolidated Financial Statements.

REGAL REXNORD CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(Dollars in Millions, Except Per Share Data)

Three Months Ended

Common Stock $ Par Value

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling
Interests

Total Equity

March 31, 2025

()

Net Income

—

Other Comprehensive Income

—

Dividends Declared ($ Per Share)

—

()

—

()

Stock Options Exercised

—

()

—

()

Share-Based Compensation

—

June 30, 2025

()

March 31, 2024

()

Net Income

—

Other Comprehensive Loss

—

()

Dividends Declared ($ Per Share)

—

()

—

()

Stock Options Exercised

—

()

—

()

Share-Based Compensation

—

Businesses Divested

—

()

June 30, 2024

()

See Accompanying Notes to Condensed Consolidated Financial Statements.

REGAL REXNORD CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(Dollars in Millions, Except Per Share Data)

Six Months Ended

Common Stock $ Par Value

Additional Paid-In Capital

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Noncontrolling Interests

Total Equity

December 31, 2024

()

Net Income

—

Other Comprehensive Income

—

Dividends Declared ($ Per Share)

—

()

—

()

Stock Options Exercised

—

()

—

()

Share-Based Compensation

—

June 30, 2025

()

December 31, 2023

()

Net Income

—

Other Comprehensive Loss

—

()

Dividends Declared ($ Per Share)

—

()

—

()

Stock Options Exercised

—

()

—

()

Share-Based Compensation

—

Loss on Sale of Businesses

Noncash Lease Expense

Share-Based Compensation Expense

Financing Fee Expense

Gain on Sale of Assets

()

Benefit from Deferred Income Taxes

()

Other Non-Cash Changes

Change in Operating Assets and Liabilities, Net of Acquisitions and Divestitures

Receivables

()

Inventories

()

Accounts Payable

Other Assets and Liabilities

()

Net Cash Provided by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Additions to Property, Plant and Equipment

()

Proceeds Received from Sales of Property, Plant and Equipment

Proceeds Received from Sale of Businesses, Net of Cash Transferred

Net Cash (Used in) Provided by Investing Activities

()

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings Under Revolving Credit Facility

Repayments Under Revolving Credit Facility

()

Repayments of Long-Term Borrowings

()

Dividends Paid to Shareholders

()

Shares Surrendered for Taxes

()

Proceeds from the Exercise of Stock Options

Net Cash Used in Financing Activities

()

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

()

Net Decrease in Cash and Cash Equivalents

()

Cash and Cash Equivalents at Beginning of Period

Cash and Cash Equivalents at End of Period


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid For:
Interest	$	$
Income taxes	$	$
Noncash Transaction:
Right-of-use asset recognized during the period in exchange for finance lease obligation	$	$

Six Months Ended

June 30, 2024

Automation & Motion Control

Industrial Powertrain Solutions

Power Efficiency Solutions

Industrial Systems

Total

North America

Asia

Europe

Rest-of-World

Total

See Note 7 - Receivables Securitization for more information.

%%Finished Goods and Purchased Parts%%

$ Buildings and Improvements

Machinery and Equipment

Property, Plant and Equipment Less: Accumulated Depreciation()()Net Property, Plant and Equipment$ $

As of June 30, 2025 and December 31, 2024, $ million and $ million of right-of-use assets were included in Net Property, Plant and Equipment, respectively.

days notice. The Company has not pledged any assets under this program. The Company has not incurred any subscription, service or other fees related to the Company's supplier finance program. The Company's outstanding obligations under the supplier finance program, which are classified within Accounts Payable, were $ million and $ million as of June 30, 2025 and December 31, 2024, respectively.

million. The Company recognized a cumulative loss of $ million on the sale of the industrial motors and generators businesses, which was primarily related to foreign currency translation losses that were reclassified out of accumulated other comprehensive income into earnings at the closing of the transaction. For the three and six months ended June 30, 2024, the Company recognized a Gain on Sale of Businesses of $ million and a Loss on Sale of Businesses of $ million, respectively.

$()$()$()Other Comprehensive Income (Loss) before Reclassifications Tax Impact() ()Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)()() ()Tax Impact Net Current Period Other Comprehensive Income (Loss) () Ending Balance$ $()$()$()June 30, 2024Hedging ActivitiesPension and Post Retirement Benefit AdjustmentsForeign Currency Translation AdjustmentsTotalBeginning Balance$ $()$()$()Other Comprehensive Income (Loss) before Reclassifications()()()()Tax Impact Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)() Tax Impact Net Current Period Other Comprehensive Income (Loss)()() Ending Balance$ $()$()$()

)$()$()$()Other Comprehensive Income (Loss) before Reclassifications () Tax Impact() ()Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)()() ()Tax Impact Net Current Period Other Comprehensive Income (Loss) () Ending Balance$ $()$()$()June 30, 2024Hedging ActivitiesPension and Post Retirement Benefit AdjustmentsForeign Currency Translation AdjustmentsTotalBeginning balance$ $()$()$()Other Comprehensive Income (Loss) before Reclassifications()()()()Tax Impact Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)() Tax Impact Net Current Period Other Comprehensive Income (Loss)()()()()

Intangible Assets

$ $ $ $ $ $ Technology Trademarks ) )

$ $ $ $()$ Intersegment Sales ()—

Net Sales(1)

—

Adjusted Cost of Sales(2)

Adjusted Engineering, Selling and Administration Expenses(3)

Other Segment Items(4)

() Income from Operations Interest Expense Interest Income()Other Expense, Net Income before Taxes Other Supplemental DisclosuresAmortization Depreciation Other significant noncash items:) )

$ $ $ $()$ Intersegment Sales ()—

Net Sales(1)

—

Adjusted Cost of Sales(2)

Adjusted Engineering, Selling and Administration Expenses(3)

Other Segment Items(4)

Income from Operations Interest Expense Interest Income()Other Expense, Net Income before Taxes Other Supplemental DisclosuresAmortization Depreciation Other significant noncash items:

$ million accounts receivable securitization facility (the “Securitization Facility”) with PNC Bank National Association, Wells Fargo Bank, N.A., and Truist Bank (the “Purchasers”). The Securitization Facility can be renewed each year for another year with agreement between the SPE and the Purchasers. Under the Securitization Facility, certain US subsidiaries of the Company (the “Originators”) transfer their accounts receivable (the “Receivables”) to the SPE, who in turn sells certain of the Receivables (the “Sold Receivables”) to the Purchasers. The Originators will service the Receivables on behalf of the Purchasers but have no continuing involvement with the Sold Receivables.

Transfers of the Sold Receivables from the SPE to the Purchasers are accounted for as a sale of financial assets, resulting in derecognition of the Sold Receivables from the Company’s Condensed Consolidated Financial Statements. These sales are priced at the face value of the Sold Receivables less a fair market value discount, resulting in a loss on the Sold Receivables recorded in Operating Expenses in the Condensed Consolidated Statement of Income. The Sold Receivables are no longer available to satisfy creditors of any Originator in the event of bankruptcy. The SPE also retains certain Receivables as collateral to the Purchasers as a guarantee of cash collections on the Sold Receivables (the “Collateral”), which is recorded in Trade Receivables, Less Allowances in the Condensed Consolidated Balance Sheet.

The Securitization Facility is structured on a revolving basis under which the Purchasers reinvest the cash collections in the Securitization Facility and purchase additional Receivables.

On June 30, 2025, the SPE received proceeds of $ million for the Sold Receivables. The Collateral as of June 30, 2025 was $ million. Cash activity related to the Securitization Facility is reflected in Net Cash Provided by Operating Activities in the Condensed Consolidated Statement of Cash Flows.

Term Facility Multicurrency Revolving Facility Altra Notes Finance Leases Other Less: Debt Issuance Costs()()Total Less: Current Maturities Long-Term Debt

The below discussion of the Company’s indebtedness should be read in conjunction with the Note 6 – Debt and Bank Credit Facilities in the Company’s 2024 Annual Report on Form 10-K filed on February 21, 2025.

Senior Notes

On January 24, 2023, the Company issued $ million aggregate principal amount of its % senior notes due 2026 (the “2026 Senior Notes”), $ million aggregate principal amount of its % senior notes due 2028 (the “2028 Senior Notes”), $ million aggregate principal amount of its % senior notes due 2030 (the “2030 Senior Notes”) and $ million aggregate principal amount of its % senior notes due 2033 (the “2033 Senior Notes” and, together with the 2026 Senior Notes, 2028 Senior Notes and 2030 Senior Notes, collectively, the “Senior Notes”). The 2026 Senior Notes are scheduled to mature on February 15, 2026, the 2028 Senior Notes are scheduled to mature on April 15, 2028, the 2030 Senior Notes are scheduled to mature on February 15, 2030, and the 2033 Senior Notes are scheduled to mature on April 15, 2033.

million in aggregate principal amount of Senior Notes for approximately $ million in aggregate principal amount of New Notes of the corresponding series. The aggregate principal amount of Senior Notes not exchanged, approximately $ million, remained outstanding across the series of Senior Notes. The New Notes consist of approximately $ million aggregate principal amount of % senior notes due 2026, $ million aggregate principal amount of % senior notes due 2028, $ million aggregate principal amount of % senior notes due 2030 and $ million aggregate principal amount of % senior notes due 2033.

Based on rates for instruments with comparable maturities and credit quality, which are classified as Level 2 inputs (see also Note 15 - Fair Value), the approximate fair value of the Senior Notes was $ million and $ million as of June 30, 2025 and December 31, 2024, respectively, compared to a carrying value of $ million as of June 30, 2025 and December 31, 2024. The Company believes that the fair value of all other debt instruments approximates their carrying value.

Credit Agreement

On March 28, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. as Administrative Agent and the lenders named therein, which was subsequently amended on November 17, 2022 and November 30, 2022. The Credit Agreement provides for an unsecured term loan facility of $ million (the "Term Facility") and an unsecured revolving loan of $ million (the "Multicurrency Revolving Facility"). The Term Facility and the Multicurrency Revolving Facility both mature on March 28, 2027.

The Term Facility requires quarterly amortization at % per annum, unless previously prepaid. Per the terms of the Credit Agreement, prepayments can be made without penalty and are applied to the next payment due. On June 30, 2025, the Company prepaid $ million of principal outstanding under the Term Facility with proceeds from the Securitization Facility (see Note 7 – Receivables Securitization). Borrowings under the Credit Agreement bear interest at floating rates based upon indices determined by the currency of the borrowing (SOFR or an alternative base rate for US Dollar borrowings) or at an alternative base rate, in each case, plus an applicable margin.

As of June 30, 2025, the Company had no standby letters of credit issued under the Multicurrency Revolving Facility, and $ million of available borrowing capacity. For the three months ended June 30, 2025 and June 30, 2024 under the Multicurrency Revolving Facility, the average daily balance in borrowings was $ million and $ million, respectively. For the six months ended June 30, 2025 and June 30, 2024 under the Multicurrency Revolving Facility, the average daily balance in borrowings was $ million and $ million, respectively. The Company paid a non-use fee of % as of June 30, 2025 on the aggregate unused amount of the Multicurrency Revolving Facility at a rate determined by reference to its consolidated funded debt to consolidated EBITDA ratio.

% % % %Multicurrency Revolving Facility % % % %

Altra Notes

On March 27, 2023, in connection with the Altra Transaction, the Company assumed $ million aggregate principal amount of % senior notes due 2026 (the “Altra Notes”).

The Altra Notes will mature on October 1, 2026. The Altra Notes may be redeemed at the option of the issuer on or after October 1, 2023. The Altra Notes are guaranteed on a senior unsecured basis by certain of the Company's domestic subsidiaries.

% as of June 30, 2025 and % as of June 30, 2024.

Compliance with Financial Covenants

The Credit Agreement requires the Company to meet specified financial ratios and to satisfy certain financial condition tests. The Company was in compliance with all financial covenants as of June 30, 2025.

Interest Cost Expected Return on Plan Assets()()()()Amortization of Prior Service Cost and Net Actuarial Loss() () Special Termination Benefits Net Periodic Benefit Expense$ $ $ $

The service cost component is included in Cost of Sales and Operating Expenses. All other components of net periodic benefit costs are included in Other Expense, Net on the Company's Condensed Consolidated Statements of Income.

For the three months ended June 30, 2025 and June 30, 2024, the Company contributed $ million and $ million, respectively, to post retirement plans. For the six months ended June 30, 2025 and June 30, 2024, the Company contributed $ million and $ million, respectively. The Company expects to make total contributions of $ million in 2025. The Company contributed a total of $ million in 2024.

For the three months ended June 30, 2025 and June 30, 2024, the Company contributed $ million and $ million, respectively, to defined contribution plans. For the six months ended June 30, 2025 and June 30, 2024, the Company contributed $ million and $ million, respectively.

10.

Performance Share Units ("2025 PSUs"), which have a performance period of , vest from the grant date and are issued at a performance target of %. These shares are payable upon the determination that the Company achieved certain established performance targets. The 2025 PSUs include performance criteria that are equally weighted: Total Shareholder Return (returns relative to the S&P 900 Industrials peer group), Return on Invested Capital, and Synergy Achievement. The targeted payout for each performance target can range from % to %. The 2025 PSUs also include a revenue multiplier, which allows for up to % total payout based on the Company's revenue growth over a period from 2025 through 2027. PSUs issued in 2024 and 2023 had a performance criteria based on Total Shareholder Return. The portion of PSUs with a performance criteria using Total Shareholder Return are valued using a Monte Carlo simulation method as of the grant date since it contains a market condition. The portion of PSUs with performance criteria based on Return on Invested Capital and Synergy Achievement are valued using the closing market price of the Company's stock as of the grant date. As set forth in the individual grant agreements, acceleration of vesting may occur under a change in control, death or disability. There are no voting rights with these instruments until vesting occurs and a share of stock is issued.

million and $ million in share-based compensation expense for the three months ended June 30, 2025 and June 30, 2024, respectively, and approximately $ million and $ million for the six months ended June 30, 2025 and June 30, 2024, respectively. The total income tax benefit recognized in the Condensed Consolidated Statements of Income for share-based compensation expense was $ million and $ million for the three months ended June 30, 2025 and June 30, 2024, respectively, and $ million and $ million for the six months ended June 30, 2025 and June 30, 2024, respectively. The Company recognizes compensation expense on grants of share-based compensation awards on a straight-line basis over the vesting period of each award.

$ Performance Share Units $

11.

% versus % for the three months ended June 30, 2024. The effective tax rate for the six months ended June 30, 2025 and June 30, 2024 was % and %, respectively. The effective tax rate for the three and six months ended June 30, 2025 was lower than the same periods in 2024 due to the tax effects associated with the divestiture of the industrial motors and generators businesses during 2024.

As of June 30, 2025 and December 31, 2024, the Company had approximately $ million of unrecognized tax benefits, all of which would impact the effective income tax rate if recognized. Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense. The Company had $ million and $ million of accrued interest as of June 30, 2025 and December 31, 2024, respectively.

The Company conducts business globally and, as a result, files income tax returns in the US federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The US Internal Revenue Service is currently conducting an audit of the Company's 2022 income tax return. No material deficiencies have been assessed related to ongoing audits as of June 30, 2025.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into U.S. law, which contains a broad range of tax reform provisions, including domestic research and development cost expensing, extension of 100% bonus depreciation, limitations on interest expense deductions and revisions to international tax regimes. The Company is currently evaluating the financial impacts of the OBBBA and will reflect its effects beginning in the third quarter of 2025. We do not currently anticipate a material effect on our annual effective tax rate or cash flows as a result of this legislation.

12.

million for the three months ended June 30, 2025 and June 30, 2024. The amount of the anti-dilutive shares was million and million for the six months ended June 30, 2025 and June 30, 2024, respectively. Effect of Dilutive Securities Denominator for Diluted Earnings Per Share

13.

of the Company's subsidiaries that it acquired in 2007 is subject to numerous claims filed in various jurisdictions relating to certain sub-fractional motors that were primarily manufactured through 2004 and that were included as components of residential and commercial ventilation units manufactured and sold in high volumes by a third party. These ventilation units are subject to product safety requirements and other potential regulation of their performance by government agencies such as the US Consumer Product Safety Commission (“CPSC”). The claims generally allege that the ventilation units were the cause of fires. The Company has recorded an estimated liability for incurred claims. Based on the current facts, the Company cannot assure that these claims, individually or in the aggregate, will not have a material adverse effect on its subsidiary's financial condition. The Company's subsidiary cannot reasonably predict the outcome of these claims, the nature or extent of any CPSC or other remedial actions, if any, that the Company's subsidiary may need to undertake with respect to motors that remain in the field, or the costs that may be incurred, some of which could be significant.

As a result of the Company’s acquisition of the Rexnord PMC business, it is entitled to indemnification from third parties to agreements with the Rexnord PMC business against certain contingent liabilities of the Rexnord PMC business, including certain pre-closing environmental liabilities.

The Company believes that, pursuant to the transaction documents related to the Rexnord PMC business’ acquisition of the Stearns business from Invensys plc (“Invensys”), Invensys (now known as Schneider Electric) is obligated to defend and indemnify us with respect to the matters described below relating to the Ellsworth Industrial Park Site and to various asbestos claims. The indemnity obligations relating to the matters described below are subject, together with indemnity obligations relating to other matters, to an overall dollar cap equal to the purchase price, which is an amount in excess of $ million. In the event that the Company is unable to recover from Invensys with respect to the matters below, it may be entitled to indemnification from Zurn Water Solutions Corporation (formerly known as Rexnord Corporation) (“Zurn”), subject to certain limitations. The following paragraphs summarize the most significant actions and proceedings:

•In 2002, the Company's subsidiary, Rexnord Industries, LLC (“Rexnord Industries”) was named as a potentially responsible party (“PRP”), together with at least other companies, at the Ellsworth Industrial Park Site, Downers Grove, DuPage County, Illinois (the “Site”), by the United States Environmental Protection Agency (“USEPA”), and the Illinois Environmental Protection Agency (“IEPA”). Rexnord Industries' Downers Grove property is situated within the Ellsworth Industrial Complex. The USEPA and IEPA allege there have been one or more releases or threatened releases of chlorinated solvents and other hazardous substances, pollutants or contaminants at the Site, allegedly including but not limited to a release or threatened release on or from Rexnord Industries' property. The relief sought by the USEPA and IEPA includes further investigation and potential remediation of the Site and reimbursement of USEPA’s past costs. In early 2020, Rexnord Industries entered into an administrative order with the USEPA to do remediation work on its Downers Grove property. The soil excavation work and transporting and disposing of the excavated material was completed in October 2020. The construction of an AS/SVE system was completed and became operational in February 2022 and continues to operate. The Company is awaiting the US EPA's approval of a pilot study work plan for an on site chemical oxidation soil remediation system. All previously pending property damage and personal injury lawsuits against Rexnord Industries related to the Site have been settled or dismissed. Pursuant to its indemnity obligation, Invensys continues to defend Rexnord Industries in known matters related to the Site, including the costs of the remediation work pursuant to the 2020 administrative order, and has paid % of the costs to date. This indemnification right would not protect Rexnord Industries against liabilities related to environmental conditions that were unknown to Invensys at the time of the acquisition of the Stearns business from Invensys.

•Multiple lawsuits (with over claimants) are pending in state or federal court in numerous jurisdictions relating to alleged personal injuries due to the alleged presence of asbestos in certain brakes and clutches previously manufactured by the Rexnord PMC business’ Stearns brand of brakes and clutches and/or its predecessor owners. Invensys and FMC, prior owners of the Stearns business, have paid % of the costs to date related to the Stearns lawsuits. Similarly, the Rexnord PMC business' Prager subsidiary is the subject of claims by multiple claimants alleging personal injuries due to the alleged presence of asbestos in a product allegedly manufactured by Prager. However, all these claims are currently on the Texas Multi-district Litigation inactive docket, and the Company does not believe that they will become active in the future. To date, the Rexnord PMC business' insurance providers have paid % of the costs related to the Prager asbestos matters. We believe that the combination of the Company’s insurance coverage and the Invensys indemnity obligations will cover any future costs of these matters.

% of the costs to date.

The Company is, from time to time, party to litigation and other legal or regulatory proceedings that arise in the normal course of its business operations and the outcomes of which are subject to significant uncertainty, including product warranty and liability claims, contract disputes and environmental, asbestos, intellectual property, employment and other litigation matters. The Company’s products are used in a variety of industrial, commercial and residential applications that subject the Company to claims that the use of its products is alleged to have resulted in injury or other damage. Many of these matters will only be resolved when one or more future events occur or fail to occur. Management conducts regular reviews, including updates from legal counsel, to assess the need for accounting recognition or disclosure of these contingencies, and such assessment inherently involves an exercise in judgment. The Company accrues for exposures in amounts that it believes are adequate, and the Company does not believe that the outcome of any such lawsuit individually or collectively will have a material effect on the Company's financial position, its results of operations or its cash flows.

The Company recognizes the cost associated with its standard warranty on its products at the time of sale. The amount recognized is based on historical experience.

$ $ $ Less: Payments Provisions Translation Adjustments()()()()Ending Balance$ $ $ $

These liabilities are included in Other Accrued Expenses and Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.

14.

) million and $() million, respectively, net of tax, of derivative (losses) on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings. $

The Company has currency forward contracts with maturities extending through September 2026. The notional amounts expressed in terms of the dollar value of the hedged currency were as follows:


	June 30, 2025	December 31, 2024
Euro	$	$
Mexican Peso
Chinese Renminbi
Indian Rupee
Canadian Dollar
Australian Dollar
British Pound

)$ $()$ $()$()$ $()Amounts Reclassified from Other Comprehensive Income (Loss):(Loss) Gain Recognized in Cost of Sales()() () Gain Recognized in Interest Expense Six Months EndedJune 30, 2025June 30, 2024Commodity ForwardsCurrency ForwardsInterest Rate SwapsTotalCommodity ForwardsCurrency ForwardsInterest Rate SwapsTotalGain (Loss) Recognized in Other Comprehensive Income (Loss)$ $ $()$ $ $()$ $()Amounts Reclassified from Other Comprehensive Income (Loss):(Loss) Gain Recognized in Cost of Sales()() ()() Gain Recognized in Interest Expense

Derivatives Not Designated as Cash Flow Hedging Instruments:

$ $ $()Six Months EndedJune 30, 2025June 30, 2024Commodity ForwardsCurrency ForwardsCommodity ForwardsCurrency ForwardsGain recognized in Operating Expenses

The AOCI balance related to hedging activities consists of a $ million gain net of tax as of June 30, 2025 which includes $ million of net current deferred losses expected to be reclassified to the Consolidated Statement of Comprehensive Income in the next twelve months. There were no gains or losses reclassified from AOCI to earnings based on the probability that the forecasted transaction would not occur, except for the recognized gain related to the termination of the interest rate swaps on June 30, 2025.

$()$ Liabilities ()

December 31, 2024

Gross Amounts as Presented on the Condensed Consolidated Balance Sheet

Derivative Contract Amounts Subject to Right of Offset

Derivative Contracts as Presented on a Net Basis

Assets

()

Liabilities

()

15.

$ Level 2Derivative Commodity Contracts Level 2Other Noncurrent Assets:Interest Rate Swap Level 2Assets Held in Rabbi Trust Level 1Derivative Currency Contracts Level 2Liabilities:Other Accrued Expenses:Derivative Currency Contracts Level 2Derivative Commodity Contracts Level 2

Level 1 fair value measurements for assets held in a Rabbi Trust are unadjusted quoted prices.

Level 2 fair value measurements for derivative assets and liabilities are measured using quoted prices in active markets for similar assets and liabilities. Interest rate swaps are valued based on the discounted cash flows using the SOFR forward yield curve for an instrument with similar contractual terms. Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments. Commodity forwards are valued based on observable market transactions of forward commodity prices. Senior Notes are valued based on rates for instruments with comparable maturities and credit quality. See Note 8 - Debt and Bank Credit Facilities for further information.

16.

$ $ $

Provision(1)

Less: Payments Ending Balance$ $ $ $

(1) Excludes equipment related write-offs and restructuring related depreciation adjustments

$ $ $ $ $ Facility Related Costs Other Expenses ()() Total Restructuring Costs$ $ $ $ $ $ Six Months EndedJune 30, 2025June 30, 2024Restructuring Costs:Cost of SalesOperating ExpensesTotalCost of SalesOperating ExpensesTotalEmployee Termination Expenses$ $ $ $ $ $ Facility Related Costs Other Expenses () Total Restructuring Costs$ $ $ $ $ $

$ $ $ $ June 30, 2024$ $ $ $ $ Restructuring Costs - Six Months EndedAutomation & Motion ControlIndustrial Powertrain SolutionsPower Efficiency SolutionsIndustrial SystemsTotalJune 30, 2025$ $ $ $ $ June 30, 2024$ $ $ $ $

million in the remainder of 2025. The Company continues to evaluate operating efficiencies and anticipates incurring additional costs in future periods in connection with these activities.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars In Millions Except Per Share Data, Unless Otherwise Noted)

Overview

Regal Rexnord Corporation (NYSE: RRX) (“we,” “us,” “our” or the “Company”) and its associates around the world help create a better tomorrow by providing sustainable solutions that power, transmit and control motion. The Company’s electric motors and air moving subsystems provide the power to create motion. A portfolio of highly engineered power transmission components and subsystems efficiently transmits motion to power industrial applications. The Company's automation offering, comprised of controllers, drives, precision motors, and actuators, controls motion in applications ranging from factory automation to precision tools used in surgical applications. We are headquartered in Milwaukee, Wisconsin and have manufacturing, sales and service facilities worldwide.

Our Company is comprised of three operating segments: Automation & Motion Control ("AMC"), Industrial Powertrain Solutions ("IPS"), and Power Efficiency Solutions ("PES").

A description of our three operating segments is as follows:

•The AMC segment designs, produces and services conveyor products, conveying automation subsystems, aerospace components, precision motion control solutions, high-efficiency miniature servo motors, controls, drives and linear actuators, as well as power management products that include automatic transfer switches and paralleling switchgear. The segment sells into markets that include industrial automation, robotics, food and beverage, aerospace, medical, agricultural and construction, general industrial, data center, and other markets.

•The IPS segment designs, produces and services a broad portfolio of highly-engineered transmission products, including mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes and gear motors, clutches, brakes, and industrial powertrain components and solutions. Increasingly, the segment produces industrial powertrain solutions, which are integrated sub-systems comprised of Regal Rexnord motors plus the critical power transmission components that efficiently transmit motion to power industrial applications. The segment serves a broad range of markets that include metals and mining, general industrial, energy, alternative energy, machinery / off-highway, discrete automation and other markets.

•The PES segment designs and produces fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, electronic drives, fans and blowers, as well as integrated subsystems comprised of two or more of these components. The segment's products are used in residential and commercial HVAC, water heaters, commercial refrigeration, commercial building ventilation, pool and spa, irrigation, dewatering, agricultural, conveying and other applications.

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

Components of Profit and Loss

Net Sales. We sell our products to a variety of manufacturers, distributors and end users. Our customers consist of a large cross-section of businesses, ranging from Fortune 100 companies to small businesses. A number of our products are sold to Original Equipment Manufacturers ("OEMs"), who incorporate our products into products they manufacture, and many of our products are built to the requirements of our customers. The majority of our sales are derived from direct sales to customers by sales personnel employed by the Company, however, a significant portion of our sales are derived from sales made by manufacturer’s representatives. Our product sales are made via purchase order, long-term contract, and, in some instances, one-time purchases. Many of our products have broad customer bases, with the levels of concentration of revenue varying from business unit to business unit.

Our level of net sales for any given period is dependent upon a number of factors, including (i) the demand for our products; (ii) the strength of the economy generally and the end markets in which we compete; (iii) our customers’ perceptions of our product

quality at any given time; (iv) our ability to meet customer demands in a timely manner; and (v) the selling price of our products. As a result, our total revenue has tended to experience quarterly variations and our total revenue for any particular quarter may not be indicative of future results.

We use the term “organic sales" to refer to sales from existing operations excluding (i) sales from acquired businesses recorded prior to the first anniversary of an acquisition (“Acquisition Sales”), (ii) less the amount of sales attributable to any businesses divested/to be exited, and (iii) the impact of foreign currency translation. The impact of foreign currency translation is determined by translating the respective period’s organic sales using the same currency exchange rates that were in effect during the prior year periods. We use the term “organic sales growth” to refer to the increase in our sales between periods that is attributable to organic sales. We use the term “acquisition growth” to refer to the increase in our sales between periods that is attributable to Acquisition Sales. Organic sales, organic sales growth and acquisition growth are non-GAAP financial measures. See reconciliation of these measures to GAAP net sales in the section entitled "Non-GAAP Measures" below.

Gross Profit. Our gross profit is impacted by our levels of net sales and cost of sales. Our cost of sales consists of costs for, among other things (i) raw materials, including copper, steel and aluminum; (ii) components such as castings, bars, tools, bearings and electronics; (iii) wages and related personnel expenses for fabrication, assembly and logistics personnel; (iv) manufacturing facilities, including depreciation on our manufacturing facilities and equipment, insurance and utilities; and (v) shipping. The majority of our cost of sales consists of raw materials and components. The price we pay for commodities and components can be subject to commodity price fluctuations. We attempt to mitigate portions of the commodity price fluctuations through fixed-price agreements with suppliers and our hedging strategies. When we experience commodity price increases, we have tended to announce price increases to our customers, with such increases generally taking effect a period of time after the public announcements. For those sales we make under long-term arrangements, we tend to include material price formulas that specify quarterly or semi-annual price adjustments based on a variety of factors, including commodity prices.

Outside of general economic cyclicality, our business units experience different levels of variation in sales from quarter to quarter based on factors specific to each business. For example, a portion of our PES segment manufactures products that are used in air conditioning applications. As a result, our sales for that business tend to be lower in the first and fourth quarters and higher in the second and third quarters. In contrast, our IPS and AMC segments each have a broad customer base and a variety of applications, thereby helping to mitigate large quarter-to-quarter fluctuations outside of general economic conditions.

Operating Expenses. Our operating expenses consist primarily of (i) general and administrative expenses; (ii) sales and marketing expenses; (iii) general engineering and research and development expenses; and (iv) handling costs incurred in conjunction with distribution activities. Personnel related costs are our largest operating expense.

Our general and administrative expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses related to our executive, finance, human resource, information technology, legal and operations functions; (ii) occupancy expenses; (iii) technology related costs; (iv) depreciation and amortization; and (v) corporate-related travel. The majority of our general and administrative costs are for salaries and related personnel expenses. These costs can vary by business given the location of our different manufacturing operations.

Our sales and marketing expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses related to our sales and marketing function; (ii) internal and external sales commissions and bonuses; (iii) travel, lodging and other out-of-pocket expenses associated with our selling efforts; and (iv) other related overhead.

Our general engineering and research and development expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses; (ii) the design and development of new products and enhancements to existing products; (iii) quality assurance and testing; and (iv) other related overhead. Our research and development efforts tend to be targeted toward developing new products that would allow us to maintain or gain additional market share, whether in new or existing applications. In particular, a large driver of our research and development efforts is to raise the energy efficiency and lower the environmental impact of our products and sub-systems.

Income from Operations. Our income from operations consists of segment gross profit less segment operating expenses. In addition, there are shared operating costs that cover corporate, engineering and IT expenses that are consistently allocated to the operating segments and are included in segment operating expenses. Income from operations is a key metric used to measure year-over-year performance of the segments.

One Big Beautiful Bill Act

2025 Outlook

The Company has updated its annual guidance for GAAP diluted earnings per share to a range of $4.50 to $5.10. The Company's mitigation actions are expected to neutralize the impact of current tariffs on 2025 earnings.

Results of Operations

Three Months Ended June 30, 2025 Compared to June 30, 2024


	Three Months Ended
	June 30, 2025				June 30, 2024
	Amount		Percent of Net Sales		Amount		Percent of Net Sales
Net Sales:
Automation & Motion Control	$	411.1			$	422.2
Industrial Powertrain Solutions	649.8				675.5
Power Efficiency Solutions	435.2				410.9
Industrial Systems (1)	—				39.0
Consolidated	$	1,496.1			$	1,547.6

Gross Profit
Automation & Motion Control	$	154.6	37.6	%	$	169.2	40.1	%
Industrial Powertrain Solutions	280.4		43.2	%	270.5		40.0	%
Power Efficiency Solutions	129.7		29.8	%	121.2		29.5	%
Industrial Systems (1)	—		—	%	10.1		25.9	%
Consolidated	$	564.7	37.7	%	$	571.0	36.9	%

Operating Expenses
Automation & Motion Control	$	124.2	30.2	%	$	127.4	30.2	%
Industrial Powertrain Solutions	188.0		28.9	%	180.7		26.8	%
Power Efficiency Solutions	70.2		16.1	%	76.1		18.5	%
Industrial Systems (1)	—		—	%	(7.1)		(18.2)	%
Consolidated	$	382.4	25.6	%	$	377.1	24.4	%

Income from Operations
Automation & Motion Control	$	30.4	7.4	%	$	41.8	9.9	%
Industrial Powertrain Solutions	92.4		14.2	%	89.8		13.3	%
Power Efficiency Solutions	59.5		13.7	%	45.1		11.0	%
Industrial Systems (1)	—		—	%	17.2		44.1	%
Consolidated	$	182.3	12.2	%	$	193.9	12.5	%

Interest Expense	$	85.3			$	101.7
Interest Income	(5.1)				(5.0)
Other Expense, Net	0.9				0.3
Income before Taxes	101.2				96.9
Provision for Income Taxes	21.6				33.9
Net Income	79.6				63.0
Less: Net Income Attributable to Noncontrolling Interests	0.4				0.5
Net Income Attributable to Regal Rexnord Corporation	79.2				62.5

(1) Results for the Industrial Systems segment covers results through the close of the sale on April 30, 2024.

Net sales for the second quarter 2025 were $1,496.1 million, a decrease of $51.5 million, or 3.3%, compared to the second quarter of 2024. The decrease consisted of a negative impact from divestitures of 2.7% and an organic sales decline of 1.2%, partially offset by a positive foreign currency translation impact of 0.6%. The decrease from divestitures was primarily due to a reduction of $39.0 million from the divestiture of the industrial motors and generators business. The decrease in organic sales of $17.7 million was driven by a $30.1 million decrease within IPS and a $14.3 million decrease within AMC, partially offset by a $26.7 million increase within PES. Gross profit for the second quarter 2025 was $564.7 million, a decrease of $6.3 million or 1.1% compared to the second quarter 2024 primarily due to a $14.6 million decrease within AMC and a $10.1 million decrease from the divestiture of the industrial motors and generators business, partially offset by an increase of $9.9 million within IPS and an increase of $8.5 million within PES. Total operating expenses for the second quarter 2025 were $382.4 million, an increase of $5.3 million or 1.4% as compared to the second quarter 2024. Interest expense for the second quarter 2025 was $85.3 million, a decrease of $16.4 million or 16.1% as compared to the second quarter 2024, primarily driven by a reduction in outstanding debt.

AMC net sales for the second quarter 2025 were $411.1 million, a decrease of $11.1 million or 2.6% as compared to the second quarter 2024. The decrease consisted of an organic sales decline of 3.4%, partially offset by positive foreign currency translation of 0.8%. The decrease in organic sales reflects weakness in the medical end market, headwinds related to temporary challenges sourcing rare earth magnets, which impacted shipments of certain higher margin products in the defense and medical markets, and project timing in the data center market, partially offset by growth in the aerospace market. Gross profit for the second quarter of 2025 was $154.6 million, a decrease of $14.6 million or 8.6% as compared to the second quarter of 2024, driven by lower volume and sales mix. Total operating expenses for the second quarter of 2025 were $124.2 million, a decrease of $3.2 million, or 2.5% as compared to the second quarter of 2024, primarily driven by a $2.3 million gain on the sale of assets during the second quarter 2025.

IPS net sales for the second quarter 2025 were $649.8 million, a decrease of $25.7 million or 3.8% as compared to the second quarter 2024. The decrease consisted of an organic sales decline of 4.4%, partially offset by positive foreign currency translation of 0.6%. The $30.1 million decrease in organic sales primarily reflects large project timing in the metals and mining market. Gross profit for the second quarter of 2025 was $280.4 million, an increase of $9.9 million or 3.7% as compared to the second quarter of 2024, primarily driven by synergies along with lower depreciation and excess and obsolescence expense. Total operating expenses for the second quarter of 2025 were $188.0 million, an increase of $7.3 million, or 4.0% as compared to the second quarter of 2024.

PES net sales for the second quarter 2025 were $435.2 million, an increase of $24.3 million or 5.9% as compared to the second quarter 2024. The increase consisted of organic sales growth of 6.5% and positive foreign currency translation of 0.2%, partially offset by the impact from divestitures of 0.8%. The increase in organic sales reflects growth in the residential and commercial HVAC markets. Gross profit for the second quarter 2025 was $129.7 million, an increase of $8.5 million or 7.0% as compared to the second quarter 2024 driven by higher volume and lower restructuring and related expenses of $5.8 million. Total operating expenses for the second quarter of 2025 were $70.2 million, a decrease of $5.9 million, or 7.8% as compared to the second quarter of 2024.

The effective tax rate for the three months ended June 30, 2025 was 21.3% versus 35.0% for the three months ended June 30, 2024 due to the tax effects associated with the divestiture of the industrial motors and generators businesses during the three months ended June 30, 2024.

Six Months Ended June 30, 2025 Compared to June 30, 2024


	Six Months Ended
	June 30, 2025				June 30, 2024
	Amount		Percent of Net Sales		Amount		Percent of Net Sales
Net Sales:
Automation & Motion Control	$	807.4			$	822.4
Industrial Powertrain Solutions	1,262.5				1,318.9
Power Efficiency Solutions	844.3				796.2
Industrial Systems (1)	—				157.8
Consolidated	$	2,914.2			$	3,095.3

Gross Profit
Automation & Motion Control	$	312.7	38.7	%	$	329.1	40.0	%
Industrial Powertrain Solutions	537.9		42.6	%	535.3		40.6	%
Power Efficiency Solutions	241.7		28.6	%	220.5		27.7	%
Industrial Systems (1)	—		—	%	39.2		24.8	%
Consolidated	$	1,092.3	37.5	%	$	1,124.1	36.3	%

Operating Expenses
Automation & Motion Control	$	247.2	30.6	%	$	247.1	30.0	%
Industrial Powertrain Solutions	363.8		28.8	%	363.4		27.6	%
Power Efficiency Solutions	139.3		16.5	%	146.9		18.5	%
Industrial Systems (1)	—		—	%	38.9		24.7	%
Consolidated	$	750.3	25.7	%	$	796.3	25.7	%

Income from Operations
Automation & Motion Control	$	65.5	8.1	%	$	82.0	10.0	%
Industrial Powertrain Solutions	174.1		13.8	%	171.9		13.0	%
Power Efficiency Solutions	102.4		12.1	%	73.6		9.2	%
Industrial Systems (1)	—		—	%	0.3		0.2	%
Consolidated	$	342.0	11.7	%	$	327.8	10.6	%

Interest Expense	$	175.5			$	207.1
Interest Income	(9.3)				(8.1)
Other Expense, Net	1.6				0.6
Income before Taxes	174.2				128.2
Provision for Income Taxes	37.1				44.8
Net Income	137.1				83.4
Less: Net Income Attributable to Noncontrolling Interests	0.6				1.1
Net Income Attributable to Regal Rexnord Corporation	136.5				82.3

(1) Results for the Industrial Systems segment covers results through the close of the sale on April 30, 2024.

Net sales decreased $181.1 million or 5.9% for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease consisted of a negative impact from divestitures of 5.3%, a negative foreign currency translation impact of 0.4% and an organic sales decline of 0.2%. The decrease from divestitures was primarily due to a reduction of $157.8 million from the divestiture of the industrial motors and generators business. The organic sales decline was due to lower organic sales of $51.9 million within IPS and $12.7 million within AMC,partially offset by an increase of $57.4 million within PES. Gross profit decreased $31.8 million, or 2.8%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily driven $39.2 million due to the divestiture of the industrial motors and generators business and a $16.4 million decrease within AMC, partially offset by an increase of $21.2 million within PES. Total operating expenses for the six months ended June 30, 2025 decreased $46.0 million or 5.8% as compared to the six months ended June 30, 2024, primarily driven by $38.9 million from the divestiture of the industrial motors and generators businesses and a $7.6 million decrease within PES. Interest expense for the six months ended June 30, 2025 was $175.5 million, a decrease of $31.6 million or 15.3% as compared to the six months ended June 30, 2024, primarily driven by a reduction in outstanding debt.

AMC net sales were $807.4 million, a decrease of $15.0 million, or 1.8%, as compared to the six months ended June 30, 2024. The decrease consisted of an organic sales decline of 1.5% and a negative foreign currency translation impact of 0.3%. The $12.7 million decrease in organic sales was primarily driven by headwinds related to temporary challenges sourcing rare earth magnets, which impacted shipments of certain higher margin products into the defense and medical markets, and project timing in the data center market, partially offset by growth in the aerospace and discrete automation markets. Gross profit decreased $16.4 million, or 5.0%, compared to the six months ended June 30, 2024, primarily driven by lower volume and sales mix. Total operating expenses for the six months ended June 30, 2025 are relatively consistent with the six months ended June 30, 2024.

IPS net sales for the six months ended June 30, 2025 were $1,262.5 million, a decrease of $56.4 million, or 4.3%, as compared to the six months ended June 30, 2024. The decrease consisted of an organic sales decline of 3.9% and a negative foreign currency translation impact of 0.4%. The $51.9 million decrease in organic sales was driven by large project timing in the metals and mining market and weakness in general industrial markets. Gross profit for the six months ended June 30, 2025 was relatively consistent with the six months ended June 30, 2024. Total operating expenses for the six months ended June 30, 2025 were relatively consistent with the six months ended June 30, 2024.

PES net sales for the six months ended June 30, 2025 were $844.3 million, an increase of $48.1 million, or 6.0%, as compared to the six months ended June 30, 2024. The increase consisted of an organic sales increase of 7.3%, partially offset by a negative impact from the divestiture of businesses of 0.9% and negative foreign currency translation impact of 0.4%. The $57.4 million increase in organic sales reflects growth in the residential and commercial HVAC markets. Gross profit increased $21.2 million, or 9.6%, as compared to the six months ended June 30, 2024, primarily driven by higher volume and lower restructuring and related expenses of $12.5 million. Total operating expenses for the six months ended June 30, 2025 decreased $7.6 million, or 5.2%, as compared to the six months ended June 30, 2024.

The effective tax rate for the six months ended June 30, 2025 was 21.3% versus 34.9% for the six months ended June 30, 2024 due to the tax effects associated with the divestiture of the industrial motors and generators businesses during the six months ended June 30, 2024.

Non-GAAP Measures

As noted above, we disclose organic sales, organic sales growth and acquisition growth non-GAAP financial measures, and we reconcile these measures in the table below to GAAP net sales. We believe that these non-GAAP financial measures are useful measures for providing investors with additional information regarding our results of operations and for helping investors understand and compare our operating results across accounting periods and compared to our peers. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for the Company's results of operations prepared and presented in accordance with GAAP.


	Automation & Motion Control			Industrial Powertrain Solutions			Power and Efficiency Solutions			Industrial Systems			Total Regal Rexnord
Net Sales Three Months Ended Jun 30, 2025	$	411.1		$	649.8		$	435.2		$	—		$	1,496.1


Impact from Foreign Currency Exchange Rates	(3.2)			(4.4)			(1.0)			—			(8.6)
Organic Sales Three Months Ended Jun 30, 2025	$	407.9		$	645.4		$	434.2		$	—		$	1,487.5

Net Sales Three Months Ended Jun 30, 2024	$	422.2		$	675.5		$	410.9		$	39.0		$	1,547.6
Net Sales from Businesses Divested	—			—			(3.4)			(39.0)			(42.4)
Adjusted Net Sales Three Months Ended Jun 30, 2024	$	422.2		$	675.5		$	407.5		$	—		$	1,505.2

Three Months Ended Jun 30, 2025 Net Sales Growth %	(2.6)		%	(3.8)		%	5.9		%	(100.0)		%	(3.3)		%
Three Months Ended Jun 30, 2025 Foreign Currency Impact %	0.8		%	0.6		%	0.2		%	—		%	0.6		%
Three Months Ended Jun 30, 2025 Divestitures %	—		%	—		%	(0.8)		%	(100.0)		%	(2.7)		%
Three Months Ended Jun 30, 2025 Organic Sales Growth %	(3.4)		%	(4.4)		%	6.5		%	—		%	(1.2)		%


	Automation & Motion Control			Industrial Powertrain Solutions			Power and Efficiency Solutions			Industrial Systems			Total Regal Rexnord
Net Sales Six Months Ended Jun 30, 2025	$	807.4		$	1,262.5		$	844.3		$	—		$	2,914.2


Impact from Foreign Currency Exchange Rates	2.3			4.5			2.4			—			9.2
Organic Sales Six Months Ended Jun 30, 2025	$	809.7		$	1,267.0		$	846.7		$	—		$	2,923.4

Net Sales Six Months Ended Jun 30, 2024	$	822.4		$	1,318.9		$	796.2		$	157.8		$	3,095.3
Net Sales from Businesses Divested	—			—			(6.9)			(157.8)			(164.7)
Adjusted Net Sales Six Months Ended Jun 30, 2024	$	822.4		$	1,318.9		$	789.3		$	—		$	2,930.6

Six Months Ended Jun 30, 2025 Net Sales Growth %	(1.8)		%	(4.3)		%	6.0		%	(100.0)		%	(5.9)		%
Six Months Ended Jun 30, 2025 Foreign Currency Impact %	(0.3)		%	(0.4)		%	(0.4)		%	—		%	(0.4)		%
Six Months Ended Jun 30, 2025 Divestitures %	—		%	—		%	(0.9)		%	(100.0)		%	(5.3)		%
Six Months Ended Jun 30, 2025 Organic Sales Growth %	(1.5)		%	(3.9)		%	7.3		%	—		%	(0.2)		%

Liquidity and Capital Resources

General

Our principal source of liquidity is cash flow provided by operating activities. In addition to operating income, other significant factors affecting our cash flow include working capital levels, capital expenditures, dividends, share repurchases, acquisitions and divestitures, availability of debt financing and the ability to attract long-term capital at acceptable terms.

Cash flow provided by operating activities was $625.5 million for the six months ended June 30, 2025, a $384.1 million increase from the six months ended June 30, 2024. This increase was primarily driven by cash proceeds from the sale of receivables under the Securitization Facility coupled with additional income generated in 2025. See Note 7 - Receivables Securitization for additional considerations regarding the Securitization Facility.

Our working capital was $1,258.7 million as of June 30, 2025, compared to $1,535.6 million as of December 31, 2024, a decrease of $276.9 million primarily due to the sale of receivables under the Securitization Facility.

Cash flow used in investing activities was $29.2 million for the six months ended June 30, 2025 as compared to cash flow provided by investing activities of $325.2 million for the six months ended June 30, 2024. The decrease was primarily driven by proceeds received from the sale of the industrial motors and generators businesses in 2024.

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

Cash flow used in financing activities was $686.2 million for the six months ended June 30, 2025, compared to $672.5 million used in financing activities for the six months ended June 30, 2024. We made net debt repayments of $633.9 million during the six months ended June 30, 2025, compared to net debt repayments of $618.4 million during the six months ended June 30, 2024. The net debt repayments in the current year primarily reflected payments of $615.0 million on the Term Facility and $17.0 million of net payments made on the Multicurrency Revolving Facility during the six months ended June 30, 2025. The net debt payments in the prior year primarily resulted from payments of $187.5 million on the Term Facility, $356.8 million on the Land Term Facility (an unsecured term loan facility fully repaid as of December 31, 2024 under which the Company's subsidiary Land Newco, Inc. was the sole borrower), and $72.1 million net repayments made on the Multicurrency Revolving

Facility during the six months ended June 30, 2024. There were $46.6 million of dividends paid for the six months ended June 30, 2025 and June 30, 2024.

The following table presents selected financial information and statistics as of June 30, 2025 and December 31, 2024:


	June 30, 2025		December 31, 2024
Cash and Cash Equivalents	$	320.1	$	393.5
Trade Receivables, Net	549.9		842.8
Inventories	1,348.3		1,227.5
Accounts Payable	615.5		542.8
Working Capital (Current Assets less Current Liabilities)	1,258.7		1,535.6
Current Ratio	2.0:1		2.3:1

As of June 30, 2025, $311.7 million of our cash was held by foreign subsidiaries and could be used in our domestic operations if necessary. We anticipate being able to support our liquidity and operating needs largely through cash generated from operations. We regularly assess our cash needs and the available sources to fund these needs which includes repatriation of foreign earnings which may be subject to withholding taxes. Under current law, we do not expect restrictions or taxes on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future. As of June 30, 2025, we have repatriated $357.8 million of foreign cash in 2025 to support the repayment of debt. We are continuing to evaluate opportunities to repatriate additional foreign cash in 2025.

We will, from time to time, maintain excess cash balances which may be used to (i) fund operations, (ii) repay outstanding debt, (iii) fund acquisitions, (iv) pay dividends, (v) make investments in new product development programs, (vi) repurchase our common stock, or (vii) fund other corporate objectives.

As of June 30, 2025, the Company has $1,100.0 million of 2026 Senior Notes which are scheduled to mature on February 16, 2026. The Company may refinance the 2026 Senior Notes with a long-term financing arrangement or may use its availability under its Multicurrency Revolving Facility and cash generated from operations to repay all or a portion of the 2026 Senior Notes. The Company has adequate liquidity under its Multicurrency Revolving Facility maturing on March 28, 2027 to refinance the 2026 Senior Notes on a long-term basis and accordingly, the Company continues to classify the debt as non-current in the Condensed Consolidated Balance Sheet as of June 30, 2025.

As of June 30, 2025, the Company had $50.0 million of borrowings under the Term Facility and $23.0 million of borrowings under the Multicurrency Revolving Facility, along with $1,547.0 million of available borrowing capacity. On June 30, 2025, the Company prepaid $420 million of principal outstanding under the Term Facility with proceeds from the Securitization Facility, which was entered on June 30, 2025. The SPE received proceeds of $368.5 million for the Sold Receivables. The Company pays a non-use fee on the aggregate unused amount of the Multicurrency Revolving Facility at a rate determined by reference to its consolidated funded debt to consolidated EBITDA ratio.

The Company plans to use cash generated from operations to fund its interest obligations and reduce the principal balance of its debt over time.

See Note 7 - Receivables Securitization and Note 8 - Debt and Bank Credit Facilities of the Notes to the Condensed Consolidated Financial Statements for more information.

Guarantor Information

Regal Rexnord Corporation (the “Parent”) is the issuer of the Senior Notes, which are guaranteed by each of its direct and indirect wholly-owned subsidiaries that is a borrower or guarantor under the Credit Agreement (the “Guarantor Subsidiaries” and, each, a “Guarantor Subsidiary”). The Senior Notes are jointly and severally unconditionally guaranteed on a senior unsecured basis by the Guarantor Subsidiaries. The guarantees are subject to release in limited circumstances upon the occurrence of certain customary conditions. For example, a Guarantor Subsidiary may be released from its guarantee of the Senior Notes under certain circumstances, including following the Parent achieving certain corporate or similar credit ratings. In addition, the guarantee of a Guarantor Subsidiary will automatically terminate under certain circumstances, including if such Guarantor Subsidiary is permanently released from its guarantee of, and is not a borrower under, the Credit Agreement.

If any of the Parent’s subsidiaries that do not guarantee the Senior Notes (the “Non-Guarantor Subsidiaries”) becomes insolvent, liquidates, reorganizes, dissolves or otherwise winds up, holders of its indebtedness and its trade creditors generally

will be entitled to payment on their claims from the assets of such subsidiary before any of those assets would be made available to the Parent or any Guarantor Subsidiary. Consequently, the claims of holders of the Senior Notes are structurally subordinated to all of the existing and future liabilities, including trade payables, of the Non-Guarantor Subsidiaries.

The following tables set forth financial information attributable to the Parent and the Guarantor Subsidiaries (collectively the “Obligor Group”). The financial information of the Obligor Group is presented on a combined basis, excluding intercompany balances and transactions between entities in the Obligor Group which have been eliminated. The financial information of the Obligor Group excludes equity investments in, and equity income or loss from, subsidiaries that are not in the Obligor Group. Material amounts due from, due to, and transactions with Non-Guarantor Subsidiaries which are included in the condensed financial information of the Obligor Group are presented with each table.

The following table sets forth summarized balance sheet information of the Obligor Group as of June 30, 2025 and December 31, 2024:


	June 30, 2025	December 31, 2024
Total Current Assets	841.6	1,132.2
Goodwill	4,220.9	4,220.9
Intangible Assets, Net of Amortization	2,077.2	2,178.3
Other Noncurrent Assets	920.4	863.3
Total Noncurrent Assets	7,218.5	7,262.5
Total Current Liabilities	697.4	658.0
Long-Term Debt	4,824.2	5,428.0
Other Noncurrent Liabilities	3,640.9	3,682.5
Total Noncurrent Liabilities	8,465.1	9,110.5
Due from Non-Guarantor Subsidiaries	440.6	398.5
Due to Non-Guarantor Subsidiaries	3,107.9	3,114.0

June 30, 2025

June 30, 2024

Net Sales1,629.4 1,682.9 Gross Profit642.5 646.4 Income from Operations143.6 143.4 Interest Expense220.8 243.9 Net Loss(72.9)(98.3)Net Loss Attributable to Regal Rexnord Corporation(72.9)(98.3)Net Sales to Non-Guarantor Subsidiaries118.1 130.8 Interest Expense Due to Non-Guarantors54.7 39.2

Critical Accounting Estimates

Our critical accounting policies and estimates, which are discussed in our Annual Report on Form 10-K for the year ended December 31, 2024, have not materially changed since that report was filed.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk relating to our operations due to changes in interest rates, foreign currency exchange rates and commodity prices of purchased raw materials. We manage the exposure to these risks through a combination of normal operating and financing activities and derivative financial instruments such as interest rate swaps, commodity cash flow hedges and foreign currency forward exchange contracts. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures, which prohibit the use of financial instruments for speculative purposes.

Generally, hedges are recorded on the balance sheet at fair value and are accounted for as cash flow hedges, with changes in fair value recorded in Accumulated Other Comprehensive Income (Loss) (“AOCI”) in each accounting period. An ineffective portion of the hedges' change in fair value, if any, is recorded in earnings in the period of change.

Interest Rate Risk

We are exposed to interest rate risk on certain of our outstanding debt obligations used to finance our operations and acquisitions. Loans under the Credit Agreement bear interest at variable rates plus a margin, based on our consolidated net leverage ratio. As of June 30, 2025, excluding the impact of interest rate swaps, we had $4,817.5 million of fixed rate debt and $73.0 million of variable rate debt. Interest rate swaps have been utilized to manage interest rate risk associated with the Company's floating rate borrowings.

Our variable rate debt exposes us to fluctuations in required interest payments due to changes in interest rates. A hypothetical 10% change in our weighted average borrowing rate on outstanding variable rate debt as of June 30, 2025 would result in a $0.3 million change in after-tax annualized earnings. We entered into two forward starting pay fixed/receive floating non-amortizing interest rate swaps in June 2020, with a total notional amount of $250.0 million. These swaps were terminated in March 2022. The cash proceeds of $16.2 million received to settle the terminated swaps were recognized as a reduction to interest expense via the effective interest rate method through June 2025 when the related Term Facility was repaid. We entered into two additional forward starting pay fixed/receive floating non-amortizing interest rate swaps in May 2022, with a total notional amount of $250.0 million and scheduled expiration in March 2027. Upon inception, the swaps were designated as cash flow hedges against forecasted interest payments with gains and losses, net of tax, measured on an ongoing basis, recorded in AOCI. These swaps were terminated on June 30, 2025 in connection the repayment of the related Term Facility, resulting in cash proceeds and recognized gain of $3.1 million. The gain is recorded in Interest expense, net on the Condensed Consolidated Statement of Income.

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

Foreign Currency Risk

We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of foreign subsidiaries, intercompany loans with foreign subsidiaries and transactions denominated in foreign currencies. Our objective is to minimize our exposure to these risks through a combination of normal operating activities and the utilization of foreign currency exchange contracts to manage our exposure on the forecasted transactions denominated in currencies other than the applicable functional currency. Contracts are executed with credit worthy banks and are denominated in currencies of major industrial countries. We do not hedge our exposure to the translation of reported results of foreign subsidiaries from local currency to United States dollars.

As of June 30, 2025, derivative currency assets (liabilities) of $10.4 million, $0.1 million and $(5.8) million are recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets, and Other Accrued Expenses, respectively. As of December 31, 2024, derivative currency assets (liabilities) of $1.0 million and $(13.6) million are recorded in Prepaid Expenses and Other Current Assets and Other Accrued Expenses, respectively. The unrealized gain of $1.4 million net of tax and unrealized loss of $5.7 million net of tax, on the effective portions of the hedges, as of June 30, 2025 and December 31, 2024 respectively, were recorded in AOCI. As of June 30, 2025 and December 31, 2024, we had $1.0 million and $2.5 million, respectively, net of tax, currency losses on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings.

The following table quantifies the outstanding foreign exchange contracts intended to hedge non-US dollar denominated receivables and payables and the corresponding impact on the value of these instruments assuming a hypothetical 10% appreciation/depreciation of their counter currency on June 30, 2025:


					Gain (Loss) From
Currency	Notional Amount		Fair Value		10% Appreciation of Counter Currency		10% Depreciation of Counter Currency
Euro	$	776.0	$	6.9	$	77.6	$	(77.6)
Mexican Peso	296.8		0.5		29.7		(29.7)
Chinese Renminbi	378.3		(3.7)		37.8		(37.8)
Indian Rupee	30.6		0.6		3.1		(3.1)
Canadian Dollar	145.4		0.3		14.5		(14.5)
Australian Dollar	25.8		0.1		2.6		(2.6)

British Pound	16.8		0.1		1.7		(1.7)

Gains and losses indicated in the sensitivity analysis would be offset by gains and losses on the underlying forecasted non-US dollar denominated cash flows.

Commodity Price Risk

We periodically enter into commodity hedging transactions to reduce the impact of changing prices for certain commodities such as copper and aluminum based upon forecasted purchases of such commodities. The contract terms of commodity hedge instruments generally mirror those of the hedged item, providing a high degree of risk reduction and correlation.

Derivative commodity assets (liabilities) of $3.0 million and $(0.3) million were recorded in Prepaid Expenses and Other Current Assets and Other Accrued Expenses, respectively, as of June 30, 2025. Derivative commodity assets (liabilities) of $0.1 million and $(4.4) million were recorded in Prepaid Expenses and Other Current Assets and Other Accrued Expenses, respectively as of December 31, 2024. The unrealized gain on the effective portion of the hedges of $2.1 million net of tax and the unrealized loss on the effective portion of the hedges of $3.2 million net of tax, as of June 30, 2025 and December 31, 2024, respectively, was recorded in AOCI. As of June 30, 2025, we had $0.1 million, net of tax, derivative commodity gains on closed hedge instruments. As of December 31, 2024, we had $0.5 million, net of tax, derivative commodity losses on closed hedge instruments in AOCI that were realized in earnings when the hedged items impacted earnings.

The following table quantifies the outstanding commodity contracts intended to hedge raw material commodity prices and the corresponding impact on the value of these instruments assuming a hypothetical 10% appreciation/depreciation of their prices on June 30, 2025:


					Gain (Loss) From
Commodity	Notional Amount		Fair Value		10% Appreciation of Commodity Prices		10% Depreciation of Commodity Prices
Copper	$	38.0	$	2.7	$	3.8	$	(3.8)

Date: August 6, 2025


			REGAL REXNORD CORPORATION (Registrant)

			/s/ Alexander P. Scarpelli
			Alexander P. Scarpelli Senior Vice President Chief Accounting Officer (Principal Accounting Officer)

Date: August 6, 2025

REGAL REXNORD CORP - Quarter Report: 2025 June (Form 10-Q)

Similar companies