Regal Rexnord Corporation

11/03/2026 | Press release | Distributed by Public on 11/03/2026 14:47

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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 employees around the world help create a better tomorrow by providing sustainable solutions that power, transmit and control motion. The Company's electric motors and air moving subsystems provide the power to create motion. A portfolio of highly engineered power transmission components and subsystems efficiently transmits motion to power industrial applications. The Company's automation offering, comprised of controllers, drives, precision motors, and actuators, controls motion in applications ranging from factory automation to precision tools used in surgical applications. We are headquartered in Milwaukee, Wisconsin and have manufacturing, sales and service facilities worldwide.
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, paralleling switchgear, and customized modular electric pod solutions ("E-Pods") that comprise relevant power and thermal management content. The segment sells into markets that include discrete factory automation, food and beverage, aerospace, general industrial, medical and data center.
•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 using power generated by the motor to various industrial applications. The segment serves a broad range of markets that include general industrial, metals and mining, energy, discrete automation and commercial HVAC.
•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 air moving subsystems comprised of two or more of these components. The segment's products are used in residential and commercial HVAC, and in a wide range of general commercial applications.
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"), if any, (ii) 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.
Recent Developments
On February 20, 2026, the US Supreme Court ruled that tariffs imposed under IEEPA were not authorized by the statute. We are the importer of record for certain raw materials and products that were previously subject to such tariffs under IEEPA. We recorded a $17.8 million and $49.8 million reduction to Cost of Sales related to certain IEEPA tariff refunds for the three and nine months ended September 30, 2026, respectively. There are other IEEPA tariff duties that may be eligible for submission and recovery under future phases of the CAPE refund process, but the ultimate amount and timing of recovery is uncertain at this time. See Note 2 - Other Financial Information of the Notes to the Condensed Consolidated Financial Statements for more information.
During the third quarter of 2026, the Company determined that it was more likely than not that it would sell its AMS business that provides hardware and software navigation solutions for autonomous guided vehicles, which is part of a reporting unit in the AMC segment. The Company identified this as a triggering event for goodwill impairment testing purposes and performed a quantitative test as of August 31, 2026, which resulted in a goodwill impairment charge of $95.5 million for the reporting unit. Subsequently, AMS met the criteria to be classified as held for sale. The Company evaluated AMS as a separate reporting unit and determined that the goodwill allocated to it was fully impaired resulting in an additional impairment charge of $23.8 million. See Note 2 - Other Financial Information and Note 3 - Held for Sale of the Notes to the Condensed Consolidated Financial Statements for further information.
Results of Operations
Three Months Ended September 30, 2026 Compared to September 30, 2025
Three Months Ended
September 30, 2026 September 30, 2025
Amount Percent of Net Sales Amount Percent of Net Sales
Net Sales
Automation & Motion Control $ 500.6 $ 402.0
Industrial Powertrain Solutions 649.5 662.3
Power Efficiency Solutions 437.9 432.7
Consolidated $ 1,588.0 $ 1,497.0
Gross Profit
Automation & Motion Control $ 173.1 34.6 % $ 148.7 37.0 %
Industrial Powertrain Solutions 274.9 42.3 % 274.0 41.4 %
Power Efficiency Solutions 142.2 32.5 % 131.5 30.4 %
Consolidated $ 590.2 37.2 % $ 554.2 37.0 %
Total Operating Expenses
Automation & Motion Control $ 254.4 50.8 % $ 126.0 31.3 %
Industrial Powertrain Solutions 186.3 28.7 % 187.9 28.4 %
Power Efficiency Solutions 68.1 15.6 % 65.9 15.2 %
Consolidated $ 508.8 32.0 % $ 379.8 25.4 %
(Loss) Income from Operations
Automation & Motion Control $ (81.3) (16.2) % $ 22.7 5.6 %
Industrial Powertrain Solutions 88.6 13.6 % 86.1 13.0 %
Power Efficiency Solutions 74.1 16.9 % 65.6 15.2 %
Consolidated $ 81.4 5.1 % $ 174.4 11.6 %
Interest Expense $ 77.0 $ 87.0
Interest Income (6.5) (5.3)
Other Expense, Net 0.3 0.8
Income before Taxes 10.6 91.9
Provision for Income Taxes 22.9 11.9
Net (Loss) Income (12.3) 80.0
Less: Net Income Attributable to Noncontrolling Interests 0.2 0.4
Net (Loss) Income Attributable to Regal Rexnord Corporation $ (12.5) $ 79.6
Net sales for the third quarter of 2026 were $1,588.0 million, an increase of $91.0 million, or 6.1%, compared to the third quarter of 2025. The increase consisted of an organic sales increase of 6.1%. The increase in organic sales of $90.7 million was primarily driven by a $101.2 million increase within AMC, partially offset by a $12.2 million decrease within IPS. Gross profit for the third quarter of 2026 was $590.2 million, an increase of $36.0 million, or 6.5%, compared to the third quarter 2025, primarily driven by a benefit from IEEPA tariff refunds of $17.8 million and an increase of $20.8 million (excluding the benefit from IEEPA tariff refunds) at AMC. Total operating expenses for the third quarter of 2026 were $508.8 million, an increase of $129.0 million, or 34.0%, as compared to the third quarter 2025, primarily due to a goodwill impairment at AMC of $119.3 million.
AMC net sales for the third quarter of 2026 were $500.6 million, an increase of $98.6 million, or 24.5%, as compared to the third quarter 2025. The increase consisted of an organic sales increase of 25.2%, partially offset by a negative foreign currency translation impact of 0.7%. The $101.2 million increase in organic sales reflects broad-based growth, with particular strength in data center, including $25 million of sales related to E-Pods, and in discrete automation. Gross profit for the third quarter of 2026 was $173.1 million, an increase of $24.4 million, or 16.4%, as compared to the third quarter of 2025, primarily driven by higher sales volumes and a benefit from IEEPA tariff refunds of $3.6 million. Total operating expenses for the third quarter of 2026 were $254.4 million, an increase of $128.4 million, or 101.9%, compared to the third quarter of 2025, primarily driven by a goodwill impairment of $119.3 million.
IPS net sales for the third quarter of 2026 were $649.5 million, a decrease of $12.8 million, or 1.9%, as compared to the third quarter of 2025. The decrease primarily consisted of an organic sales decrease of $12.2 million, or 1.8%, driven by weakness in metals and mining partially offset by strength in discrete automation and energy markets. Gross profit for the third quarter of 2026 was $274.9 million, an increase of $0.9 million, or 0.3%, as compared to the third quarter of 2025, partially driven by a benefit from IEEPA tariff refunds of $6.0 million, partially offset by the impact of certain operational inefficiencies. Total operating expenses for the third quarter of 2026 were relatively consistent with the third quarter of 2025.
PES net sales for the third quarter of 2026 were $437.9 million, an increase of $5.2 million, or 1.2%, as compared to the third quarter of 2025. The increase consisted of an organic sales increase of 0.4% and a positive foreign currency translation impact of 0.8%. The $1.7 million increase in organic sales primarily reflects growth in the commercial HVAC market, which was partially offset by weakness in the residential HVAC and pool markets. Gross profit for the third quarter of 2026 was $142.2 million, an increase of $10.7 million, or 8.1%, as compared to the third quarter of 2025, primarily driven by a benefit from IEEPA tariff refunds of $8.2 million. Total operating expenses for the third quarter of 2026 were relatively consistent with the third quarter of 2025.
The effective tax rate for the three months ended September 30, 2026 and September 30, 2025 was 216.0% and 12.9%, respectively. The increase was primarily due to a non-deductible goodwill impairment.
Nine Months Ended September 30, 2026 Compared to September 30, 2025
Nine Months Ended
September 30, 2026 September 30, 2025
Amount Percent of Net Sales Amount Percent of Net Sales
Net Sales
Automation & Motion Control $ 1,435.4 $ 1,209.4
Industrial Powertrain Solutions 1,967.2 1,924.8
Power Efficiency Solutions 1,222.9 1,277.0
Consolidated $ 4,625.5 $ 4,411.2
Gross Profit
Automation & Motion Control $ 518.2 36.1 % $ 461.4 38.2 %
Industrial Powertrain Solutions 836.6 42.5 % 811.9 42.2 %
Power Efficiency Solutions 396.9 32.5 % 373.2 29.2 %
Consolidated $ 1,751.7 37.9 % $ 1,646.5 37.3 %
Total Operating Expenses
Automation & Motion Control $ 519.5 36.2 % $ 373.2 30.9 %
Industrial Powertrain Solutions 571.1 29.0 % 551.7 28.7 %
Power Efficiency Solutions 211.8 17.3 % 205.3 16.1 %
Consolidated $ 1,302.4 28.2 % $ 1,130.2 25.6 %
(Loss) Income from Operations
Automation & Motion Control $ (1.3) (0.1) % $ 88.2 7.3 %
Industrial Powertrain Solutions 265.5 13.5 % 260.2 13.5 %
Power Efficiency Solutions 185.1 15.1 % 167.9 13.1 %
Consolidated $ 449.3 9.7 % $ 516.3 11.7 %
Interest Expense $ 234.9 $ 262.5
Interest Income (17.3) (14.6)
Other Expense, Net 0.9 2.4
Income before Taxes 230.8 266.0
Provision for Income Taxes 62.0 49.0
Net Income 168.8 217.0
Less: Net Income Attributable to Noncontrolling Interests 0.4 1.1
Net Income Attributable to Regal Rexnord Corporation $ 168.4 $ 215.9
Net sales for the nine months ended September 30, 2026 were $4,625.5 million, an increase of $214.3 million, or 4.9%, compared to the nine months ended September 30, 2025. The increase primarily consisted of an organic sales increase of 3.7% and a positive foreign currency translation impact of 1.3%. The increase in organic sales of $162.0 million was driven by a $213.5 million increase within AMC and a $17.8 million increase within IPS, partially offset by a $69.3 million decrease in organic sales within PES. Gross profit increased $105.2 million, or 6.4%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by a benefit from IEEPA tariff refunds of $49.8 million and increases of $47.3 million and $10.4 million, (excluding the benefit from IEEPA tariff refunds) at AMC and IPS, respectively. Total operating expenses for the nine months ended September 30, 2026 increased $172.2 million, or 15.2%, compared to the nine months ended September 30, 2025, primarily driven by an increase at AMC of $146.3 million, which included a goodwill impairment of $119.3 million, and an increase at IPS of $19.4 million. Interest expense for the nine months ended September 30, 2026 was $234.9 million, a decrease of $27.6 million, or 10.5%, compared to the nine months ended September 30, 2025, primarily driven by a reduction in outstanding debt.

AMC net sales for the nine months ended September 30, 2026 were $1,435.4 million, an increase of $226.0 million, or 18.7%, compared to the nine months ended September 30, 2025. The increase consisted of an organic sales increase of 17.7% and a positive foreign currency translation impact of 1.0%. The $213.5 million increase in organic sales was primarily driven by broad-based growth, but with particular strength in data center, including $25 million of sales related to E-Pods, discrete automation, and aerospace and defense markets. Gross profit increased $56.8 million, or 12.3%, compared to the nine months ended September 30, 2025, primarily driven by higher sales volumes and a benefit from IEEPA tariff refunds of $9.5 million. Total operating expenses increased by $146.3 million, or 39.2%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by a goodwill impairment of $119.3 million, higher labor and benefit costs due to inflation and growth investments, and foreign currency impacts.
IPS net sales for the nine months ended September 30, 2026 were $1,967.2 million, an increase of $42.4 million, or 2.2%, compared to the nine months ended September 30, 2025. The increase primarily consisted of an organic sales increase of 0.9% and a positive foreign currency translation impact of 1.4%. The $17.8 million increase in organic sales was primarily driven by strength in the energy, general industrial, and discrete automation markets partially offset by weakness in the metals and mining market. Gross profit increased $24.7 million, or 3.0%, compared to the nine months ended September 30, 2025, primarily driven by a benefit from IEEPA tariff refunds of $14.3 million, lower restructuring and related costs of $6.5 million and synergy benefits, partially offset by the impact of certain operational inefficiencies. Total operating expenses increased $19.4 million, or 3.5%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by increased labor and benefit costs due to inflation, foreign currency impacts and a $6.0 million gain on the sale of assets in the first quarter of 2025.
PES net sales for the nine months ended September 30, 2026 were $1,222.9 million, a decrease of $54.1 million, or 4.2%, compared to the nine months ended September 30, 2025. The decrease consisted of an organic sales decrease of 5.4%, partially offset by a positive foreign currency translation impact of 1.2%. The $69.3 million decrease in organic sales primarily reflects weakness in the residential HVAC and pool markets, which was partially offset by growth in the commercial HVAC market. Gross profit increased $23.7 million, or 6.4%, as compared to the nine months ended September 30, 2025, primarily driven by a benefit from IEEPA tariff refunds of $26.0 million. Total operating expenses for the nine months ended September 30, 2026 were relatively consistent with the nine months ended September 30, 2025.
The effective tax rate for the nine months ended September 30, 2026 and September 30, 2025 was 26.9% and 18.4%, respectively. The increase was primarily due to the relative impact of permanent and discrete tax items, including a non-deductible goodwill impairment in the current year, partially offset by benefits from tax planning strategies.
Non-GAAP Measures
As noted above, we disclose organic sales and organic sales growth as non-GAAP financial measures, and we reconcile these measures in the table below to GAAP net sales. We believe that these non-GAAP financial measures are useful measures for providing investors with additional information regarding our results of operations and for helping investors understand and compare our operating results across accounting periods and compared to our peers. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for the Company's results of operations prepared and presented in accordance with GAAP.
Automation & Motion Control Industrial Powertrain Solutions Power Efficiency Solutions Total Regal Rexnord
Net Sales Three Months Ended Sep 30, 2026 $ 500.6 $ 649.5 $ 437.9 $ 1,588.0
Impact from Foreign Currency Exchange Rates 2.6 (0.2) (3.5) (1.1)
Organic Sales Three Months Ended Sep 30, 2026 $ 503.2 $ 649.3 $ 434.4 $ 1,586.9
Net Sales Three Months Ended Sep 30, 2025 $ 402.0 $ 662.3 $ 432.7 $ 1,497.0
Net Sales from Businesses Divested - (0.8) - (0.8)
Adjusted Net Sales Three Months Ended Sep 30, 2025 $ 402.0 $ 661.5 $ 432.7 $ 1,496.2
Three Months Ended Sep 30, 2026 Net Sales Growth % 24.5 % (1.9) % 1.2 % 6.1 %
Three Months Ended Sep 30, 2026 Foreign Currency Impact % (0.7) % - % 0.8 % 0.1 %
Three Months Ended Sep 30, 2026 Divestitures % - % (0.1) % - % (0.1) %
Three Months Ended Sep 30, 2026 Organic Sales Growth % 25.2 % (1.8) % 0.4 % 6.1 %
Automation & Motion Control Industrial Powertrain Solutions Power Efficiency Solutions Total Regal Rexnord
Net Sales Nine Months Ended Sep 30, 2026 $ 1,435.4 $ 1,967.2 $ 1,222.9 $ 4,625.5
Impact from Foreign Currency Exchange Rates (12.5) (27.0) (15.2) (54.7)
Organic Sales Nine Months Ended Sep 30, 2026 $ 1,422.9 $ 1,940.2 $ 1,207.7 $ 4,570.8
Net Sales Nine Months Ended Sep 30, 2025 $ 1,209.4 $ 1,924.8 $ 1,277.0 $ 4,411.2
Net Sales from Businesses Divested - (2.4) - (2.4)
Adjusted Net Sales Nine Months Ended Sep 30, 2025 $ 1,209.4 $ 1,922.4 $ 1,277.0 $ 4,408.8
Nine Months Ended Sep 30, 2026 Net Sales Growth % 18.7 % 2.2 % (4.2) % 4.9 %
Nine Months Ended Sep 30, 2026 Foreign Currency Impact % 1.0 % 1.4 % 1.2 % 1.3 %
Nine Months Ended Sep 30, 2026 Divestitures % - % (0.1) % - % (0.1) %
Nine Months Ended Sep 30, 2026 Organic Sales Growth % 17.7 % 0.9 % (5.4) % 3.7 %
Liquidity and Capital Resources
General
Our principal source of liquidity is cash flow provided by operating activities. In addition to operating income, other significant factors affecting our cash flow include working capital levels, capital expenditures, dividends, share repurchases, acquisitions and divestitures, availability of debt financing and the ability to attract long-term capital at acceptable terms.
Cash flow provided by operating activities was $411.4 million for the nine months ended September 30, 2026, a $411.6 million decrease from the nine months ended September 30, 2025. This decrease was primarily driven by $398.3 million of cash proceeds from the sale of receivables under the Securitization Facility in 2025 along with other working capital changes. See Note 7 - Receivables Securitization for additional information regarding the Securitization Facility.
Our working capital (inclusive of assets and liabilities classified as held for sale) was $1,587.1 million as of September 30, 2026, compared to $1,448.0 million as of December 31, 2025, an increase of $139.1 million driven by increases in prepaid expenses and other current assets, inventory, and accounts receivables, partially offset by a decrease in cash and increase in accounts payable.
Cash flow used in investing activities was $61.8 million and $52.1 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The increase was primarily driven by proceeds received from sales of property, plant and equipment in 2025.
In 2026, we anticipate capital spending for property, plant and equipment to be approximately $110.0 million. We believe that our present manufacturing facilities will be sufficient to provide adequate capacity for our operations for the remainder of 2026. We anticipate funding the remaining 2026 capital spending with operating cash flows.
Cash flow used in financing activities was $420.5 million and $784.5 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. We made net debt repayments of $340.0 million during the nine months ended September 30, 2026, compared to net debt repayments of $708.4 million during the nine months ended September 30, 2025. The net debt repayments in the current year primarily reflected the repayment of $1,100.0 million of 2026 Senior Notes partially offset by $500.0 million in net proceeds from the 2025 Term Facility and $271.2 million of net borrowings made on the 2025 Revolving Facility during the nine months ended September 30, 2026. The net debt repayments in the prior year primarily reflected payments of $665.0 million on the Term Facility and $40.0 million of net payments made on the Multicurrency Revolving Facility during the nine months ended September 30, 2025. There were $69.9 million and $69.7 million of dividends paid for the nine months ended September 30, 2026 and September 30, 2025, respectively.
The following table presents selected financial information and statistics as of September 30, 2026 and December 31, 2025:
September 30, 2026 December 31, 2025
Cash and Cash Equivalents $ 449.6 $ 521.7
Trade Receivables, Net 584.7 524.2
Inventories 1,392.7 1,321.7
Accounts Payable 653.4 607.3
Working Capital 1,587.1 1,448.0
Current Ratio 2.2:1 2.1:1
As of September 30, 2026, $444.3 million of our cash was held by foreign subsidiaries and could be used in our domestic operations if necessary. We anticipate being able to support our liquidity and operating needs largely through cash generated from operations. We regularly assess our cash needs and the available sources to fund these needs which includes repatriation of foreign earnings which may be subject to withholding taxes. Under current law, we do not expect restrictions or taxes on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future. As of September 30, 2026, we have repatriated $440.4 million of foreign cash in 2026. We are continuing to evaluate opportunities to repatriate additional foreign cash in 2026.
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 and enhancements to existing products, (vi) repurchase our common stock, or (vii) fund other corporate objectives and strategic plans.
The Company borrowed $850.0 million under the 2025 Term Facility on February 12, 2026 and used the proceeds to refinance $1,100.0 million of 2026 Senior Notes. The Company made a prepayment of $350.0 million on September 25, 2026. As of September 30, 2026, the Company had $500.0 million outstanding under the 2025 Term Facility and $268.8 million of borrowings under the 2025 Revolving Facility, including approximately €230.0 million, or $260.9 million, of euro-denominated borrowings, along with $1,231.2 million of available borrowing capacity. The Company pays a non-use fee on the aggregate unused amount of the 2025 Revolving Facility at a rate determined by reference to its consolidated funded debt to consolidated EBITDA ratio.
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 8 - Debt and Bank Credit Facilities and Note 3 - Held for Sale 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 2025 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 2025 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 September 30, 2026 and December 31, 2025:
September 30, 2026
December 31, 2025
Total Current Assets $ 955.2 $ 935.1
Goodwill 4,204.0 4,221.2
Intangible Assets, Net of Amortization 1,887.8 1,975.0
Other Noncurrent Assets 894.8 741.7
Total Noncurrent Assets
6,986.6 6,937.9
Total Current Liabilities 665.7 692.7
Long-Term Debt 4,141.7 4,732.0
Other Noncurrent Liabilities 3,202.7 3,462.5
Total Noncurrent Liabilities
7,344.4 8,194.5
Due from Non-Guarantor Subsidiaries 457.9 284.0
Due to Non-Guarantor Subsidiaries $ 2,744.0 $ 2,952.4
The following table sets forth summarized income statement information of the Obligor Group for the nine months ended September 30, 2026:
September 30, 2026
Net Sales $ 2,480.9
Gross Profit 963.4
Income from Operations 128.7
Interest Expense 220.1
Net Loss (131.2)
Net Loss Attributable to Regal Rexnord Corporation (131.2)
Net Sales to Non-Guarantor Subsidiaries 177.8
Interest Expense Due to Non-Guarantors $ 93.0
Critical Accounting Estimates
Goodwill
We test goodwill for impairment at least annually and perform our annual impairment test as of the end of October. We monitor for goodwill impairment triggering events at least quarterly, and if a trigger is identified we test goodwill for impairment during the interim period. Factors that could trigger an impairment assessment include significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset or significant negative industry or economic trends. Reporting units with recent impairments or those with goodwill resulting from recent acquisitions generally present the highest risk of impairment.
When testing goodwill for impairment, we have the option to first assess qualitative factors to determine whether a quantitative test is necessary. In performing qualitative assessments, we evaluate, among other things, actual and forecasted operating results, certain market factors, including discount rates and peer company EBITDA multiples, and the passing margin of prior quantitative tests.
If a quantitative test is performed, we determine the fair value of each reporting unit utilizing an income approach (discounted cash flow method) weighted 75% and a market approach (consisting of a comparable public company multiples methodology) weighted 25%. The assumptions that have the most significant effect on the fair value calculations are discount rates, market multiples, forecasted revenue and EBITDA and terminal growth rates. Discount rates are determined using market and industry data and reflect the risks and uncertainties inherent to each reporting unit and our internally developed forecasts.
During the third quarter of 2026, we determined that it was more likely than not that we would sell our AMS business that provides hardware and software navigation solutions for autonomous guided vehicles, which is part of a reporting unit in the AMC segment. We identified this as a triggering event for goodwill impairment testing purposes and performed a quantitative test as of August 31, 2026. The discount rate used in the income approach was 13.0%. We determined that goodwill was impaired and recorded a goodwill impairment charge of $95.5 million for the reporting unit.
Subsequently, AMS met the criteria to be classified as held for sale and goodwill was allocated to AMS and the retained portion of the reporting unit based on their relative fair values. We evaluated AMS as a separate reporting unit and determined that the goodwill allocated to it was fully impaired resulting in an additional impairment charge of $23.8 million.
See Note 2 - Other Financial Information and Note 3 - Held for Sale of the Notes to the Condensed Consolidated Financial Statements for further information.
Except as discussed above, there have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
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