Regal Rexnord Corporation
02/20/2026 | Press release | Distributed by Public on 02/20/2026 16:14
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars In Millions Except Per Share Data, Unless Otherwise Noted)
Overview
General
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.
As of December 31, 2025, the Company, including its subsidiaries, employed approximately 28,700 full-time people in its global manufacturing, sales, and service facilities and corporate offices. For the year ended December 31, 2025, we reported annual net sales of $5.9 billion compared to $6.0 billion for the year ended December 31, 2024.
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.
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 - Acquisitions and Divestitures and Note 5 - Segment Information of the Notes to the Consolidated Financial Statements for further information and a description of the Company's operating segments, respectively.
We have omitted discussion of trends comparing 2023 to 2024 as this information has been previously disclosed within Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations of our 10-K for the year ended December 31, 2024 filed with the SEC on February 21, 2025.
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) 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.
Goodwill & Other Asset Impairments.
The following table presents impairments by segment as of December 31, 2025, December 31, 2024 and December 31, 2023:
| Automation & Motion Control | Industrial Powertrain Solutions | Power Efficiency Solutions |
Industrial Systems(1)
|
Total | |||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Goodwill Impairments | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||
|
Loss on Sale of Businesses
|
- | 4.5 | - | - | 4.5 | ||||||||||||||||||||||||
| Total Impairments | $ | - | $ | 4.5 | $ | - | $ | - | $ | 4.5 | |||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Goodwill Impairments | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||
|
Impairment of Other Long-Lived Assets(2)
|
1.8 | 1.1 | 1.1 | - | 4.0 | ||||||||||||||||||||||||
|
Loss on Sale of Businesses (3)
|
1.1 | 1.7 | 1.4 | 4.3 | 8.5 | ||||||||||||||||||||||||
| Total Impairments | $ | 2.9 | $ | 2.8 | $ | 2.5 | $ | 4.3 | $ | 12.5 | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||
| Goodwill Impairments | $ | - | $ | - | $ | - | $ | 57.3 | $ | 57.3 | |||||||||||||||||||
|
Impairment of Other Long-Lived Assets (2)
|
3.4 | 2.5 | 1.5 | 0.4 | 7.8 | ||||||||||||||||||||||||
|
Loss on Sale of Businesses (3)
|
- | - | - | 87.7 | 87.7 | ||||||||||||||||||||||||
| Total Impairments | $ | 3.4 | $ | 2.5 | $ | 1.5 | $ | 145.4 | $ | 152.8 | |||||||||||||||||||
(1) The goodwill impairment in 2023 was in the global industrial motors reporting unit.
(2) Related to assets held for sale.
(3) Primarily related to the sale of the industrial motors and generators businesses. See Note 3 - Acquisitions and Divestitures for additional information.
Income (Loss) from Operations. Our income (loss) 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 (loss) from operations is a key metric used to measure year-over-year performance of the segments.
Results of Operations
The following table sets forth selected information for the years indicated:
| 2025 | 2024 | |||||||||||||
| Net Sales: | Amount | Percent of Net Sales | Amount | Percent of Net Sales | ||||||||||
| Automation & Motion Control | $ | 1,689.8 | $ | 1,633.8 | ||||||||||
| Industrial Powertrain Solutions | 2,594.1 | 2,598.1 | ||||||||||||
| Power Efficiency Solutions | 1,650.6 | 1,644.1 | ||||||||||||
|
Industrial Systems(1)
|
- | 157.8 | ||||||||||||
| Consolidated | $ | 5,934.5 | $ | 6,033.8 | ||||||||||
| Gross Profit | ||||||||||||||
| Automation & Motion Control | $ | 638.9 | 37.8 | % | $ | 641.6 | 39.3 | % | ||||||
| Industrial Powertrain Solutions | 1,093.4 | 42.1 | % | 1,051.5 | 40.5 | % | ||||||||
| Power Efficiency Solutions | 485.5 | 29.4 | % | 458.7 | 27.9 | % | ||||||||
|
Industrial Systems(1)
|
- | - | % | 39.2 | 24.8 | % | ||||||||
| Consolidated | $ | 2,217.8 | 37.4 | % | $ | 2,191.0 | 36.3 | % | ||||||
| Operating Expenses | ||||||||||||||
| Automation & Motion Control | $ | 505.0 | 29.9 | % | $ | 497.2 | 30.4 | % | ||||||
| Industrial Powertrain Solutions | 755.9 | 29.1 | % | 728.8 | 28.1 | % | ||||||||
| Power Efficiency Solutions | 276.1 | 16.7 | % | 296.1 | 18.0 | % | ||||||||
|
Industrial Systems(1)
|
- | - | % | 38.9 | 24.7 | % | ||||||||
| Consolidated | $ | 1,537.0 | 25.9 | % | $ | 1,561.0 | 25.9 | % | ||||||
|
Income from Operations
|
||||||||||||||
| Automation & Motion Control | $ | 133.9 | 7.9 | % | $ | 144.4 | 8.8 | % | ||||||
| Industrial Powertrain Solutions | 337.5 | 13.0 | % | 322.7 | 12.4 | % | ||||||||
| Power Efficiency Solutions | 209.4 | 12.7 | % | 162.6 | 9.9 | % | ||||||||
|
Industrial Systems(1)
|
- | - | % | 0.3 | 0.2 | % | ||||||||
| Consolidated | $ | 680.8 | 11.5 | % | $ | 630.0 | 10.4 | % | ||||||
| Interest Expense | 349.2 | 399.7 | ||||||||||||
| Interest Income | (23.7) | (18.8) | ||||||||||||
|
Other Expense, Net
|
2.8 | 1.1 | ||||||||||||
|
Income before Taxes
|
352.5 | 248.0 | ||||||||||||
| Provision for Income Taxes | 71.7 | 49.6 | ||||||||||||
|
Net Income
|
280.8 | 198.4 | ||||||||||||
| Net Income Attributable to Noncontrolling Interests | 1.3 | 2.2 | ||||||||||||
|
Net Income Attributable to Regal Rexnord Corporation
|
$ | 279.5 | $ | 196.2 | ||||||||||
(1) Results for the Industrial Systems segment covers results through the close of the sale on April 30, 2024.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Net sales for 2025 were $5,934.5 million, a decrease of $99.3 million, or 1.6%, as compared to 2024. The decrease primarily consisted of a negative impact from divestitures of 2.8%, partially offset by an organic sales increase of 0.8% and a positive foreign currency translation impact of 0.4%. 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 increase in organic sales of $44.9 million was primarily driven by a $45.8 million increase within AMC and a $16.7 million increase within PES, partially offset by a decrease of $17.6 million within IPS. Gross profit increased $26.8 million or 1.2% as compared to 2024, primarily driven by a $41.9 million increase within IPS and a $26.8 million increase within PES, partially offset by a $39.2 million impact from divesting the industrial motors and generators business and a $2.7 million decrease within AMC. Total operating expenses for 2025 were $1,537.0 million, a decrease of $24.0 million, or 1.5% as compared to 2024, primarily driven by a $38.9 million impact from divesting the industrial motors and generators businesses and a $20.0 million decrease within PES, partially offset by a $27.1 million increase within IPS and a $7.8 million increase within AMC. Interest expense for 2025 was $349.2 million, a decrease of $50.5 million, or 12.6%. compared to 2024, primarily driven by a reduction in outstanding debt.
AMC net sales for 2025 were $1,689.8 million, an increase of $56.0 million, or 3.4%, as compared to 2024. The increase consisted of an organic sales increase of 2.8% and a positive foreign currency translation impact of 0.6%. The $45.8 million increase in organic sales was primarily driven by growth in the aerospace and discrete automation markets, partially offset by headwinds in the general industrial and medical end markets, and persistent challenges sourcing rare earth magnets, particularly for products serving the medical and defense markets. Gross profit and operating expenses for 2025 were relatively consistent with 2024.
IPS net sales for 2025 were $2,594.1 million, a decrease of $4.0 million, or 0.2%, as compared to 2024. The decrease consisted of an organic sales decline of 0.7%, partially offset by a positive foreign currency translation impact of 0.5%. The $17.6 million decrease in organic sales was primarily driven by weakness in general industrial markets, partially offset by strength in energy markets. Gross profit increased $41.9 million, or 4.0%, as compared to 2024, primarily driven by synergies, partially offset by lower volume and sales mix headwinds. Total operating expenses for 2025 increased $27.1 million, or 3.7%, as compared to 2024, primarily driven by increased labor and benefit costs, growth investments and higher loss on sale of businesses.
PES net sales for 2025 were $1,650.6 million, an increase of $6.5 million, or 0.4%, as compared to 2024. The increase consisted of an organic sales increase of 1.0% and a positive foreign currency translation impact of 0.2%, partially offset by a negative impact from divestitures of 0.8%. The $16.7 million increase in organic sales primarily reflects growth in the residential and commercial HVAC markets. Gross profit increased $26.8 million, or 5.8%, as compared to 2024, primarily driven by higher volume and lower restructuring and related expenses of $28.4 million. Total operating expenses for 2025 decreased $20.0 million, or 6.8%, as compared to 2024, primarily driven by discretionary cost reductions and lower allocated expenses.
The effective tax rate for 2025 was 20.3%, which is relatively consistent with the effective tax rate for 2024 of 20.0%.
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 Efficiency Solutions | Industrial Systems | Total | ||||||||||||||||||||||||||||
|
Net Sales Year Ended December 31, 2025
|
$ | 1,689.8 | $ | 2,594.1 | $ | 1,650.6 | $ | - | $ | 5,934.5 | ||||||||||||||||||||||
|
Impact from Foreign Currency Exchange Rates
|
(10.2) | (14.4) | (3.1) | - | (27.7) | |||||||||||||||||||||||||||
|
Organic Sales Year Ended December 31, 2025
|
$ | 1,679.6 | $ | 2,579.7 | $ | 1,647.5 | $ | - | $ | 5,906.8 | ||||||||||||||||||||||
|
Net Sales Year Ended December 31, 2024
|
$ | 1,633.8 | $ | 2,598.1 | $ | 1,644.1 | $ | 157.8 | $ | 6,033.8 | ||||||||||||||||||||||
| Net Sales from Businesses Divested | - | (0.8) | (13.3) | (157.8) | (171.9) | |||||||||||||||||||||||||||
|
Adjusted Net Sales Year Ended December 31, 2024
|
$ | 1,633.8 | $ | 2,597.3 | $ | 1,630.8 | $ | - | $ | 5,861.9 | ||||||||||||||||||||||
| Year Ended Dec 31, 2025 Net Sales Growth % | 3.4 | % | (0.2) | % | 0.4 | % | (100.0) | % | (1.6) | % | ||||||||||||||||||||||
| Year Ended Dec 31, 2025 Foreign Currency Impact % | 0.6 | % | 0.5 | % | 0.2 | % | - | % | 0.4 | % | ||||||||||||||||||||||
| Year Ended Dec 31, 2025 Divestitures % | - | % | - | % | (0.8) | % | (100.0) | % | (2.8) | % | ||||||||||||||||||||||
| Year Ended Dec 31, 2025 Organic Sales Growth % | 2.8 | % | (0.7) | % | 1.0 | % | - | % | 0.8 | % | ||||||||||||||||||||||
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 flows 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 $990.8 million in 2025, a $381.4 million increase from 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, partially offset by other working capital changes. See Note 6 - Receivables Securitization for additional considerations regarding the Securitization Facility.
Our working capital was $1,448.0 million and $1,535.6 million as of December 31, 2025 and December 31, 2024, respectively. The decline in working capital was primarily due to the sale of receivables under the Securitization Facility and an increase in accounts payable, partially offset by an increase in inventory.
Cash flow used in investing activities was $71.0 million in 2025, compared to cash flow provided by investing activities of $275.4 million in 2024.The change was driven primarily by $374.8 million in proceeds received from the sale of the industrial motors and generators businesses in 2024, partially offset by higher proceeds received from sales of property, plant and equipment of $18.8 millionand lower capital expenditures of $11.8 millionin 2025compared to 2024.
In 2026, we anticipate capital spending for property, plant and equipment to be approximately $120.0 million. We believe that our present manufacturing facilities will be sufficient to provide adequate capacity for our operations in 2026. We anticipate funding 2026 capital spending primarily with operating cash flows.
Cash flow used in financing activities was $814.1 million in 2025, compared to $1,095.8 million cash flow used in financing activities in 2024. The Company made $228.9 million less net debt repayments in 2025 compared to 2024. The $709.4 million of net debt repayments in the current year primarily resulted from payments of $665.0 million on the Term Facility and $40.0 million net repayments made on the Multicurrency Revolving Facility. The Company did not repurchase any common stock in 2025, compared to $50.0 million in repurchases in 2024. The Company paid $93.0 million in dividends to shareholders in both 2025 and 2024.
The following table presents selected financial information and statistics as of December 31, 2025 and December 31, 2024:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||
| Cash and Cash Equivalents | $ | 521.7 | $ | 393.5 | |||||||||||||
| Trade Receivables, Net | 524.2 | 842.8 | |||||||||||||||
| Inventories | 1,321.7 | 1,227.5 | |||||||||||||||
| Accounts Payable | 607.3 | 542.8 | |||||||||||||||
| Working Capital | 1,448.0 | 1,535.6 | |||||||||||||||
| Current Ratio | 2.1:1 | 2.3:1 | |||||||||||||||
As of December 31, 2025, $429.7 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 short-term 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 that may be subject to withholding taxes. Under current law, we do not expect restrictions or taxes on repatriation of cash held outside of the US to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future. We repatriated approximately $457.4 million of foreign cash in 2025 to support the repayment of debt. 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, (vi) repurchase our common stock, or (vii) fund other corporate objectives.
As of December 31, 2025, the Company had no borrowings under the 2025 Term Facility. The Company borrowed $850.0 million under the 2025 Term Facility on February 12, 2026 and used the proceeds to refinance the 2026 Senior Notes.
As of December 31, 2025, the Company had no borrowings under the 2025 Revolving Facility, and had $1,500.0 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.
As of December 31, 2025, the Company had $1,100.0 million of 2026 Senior Notes which matured on February 16, 2026. The Company used the proceeds from the 2025 Term Facility 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 Consolidated Balance Sheet as of December 31, 2025.
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 3 - Acquisitions and Divestitures, Note 6 - Receivables Securitization and Note 7 - Debt and Bank Credit Facilities of the Notes to the Consolidated Financial Statements for more information.
Litigation
See Part 1 - Item 3 - Legal Proceedings and Note 12 - Contingencies of the Notes to the 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 summarized 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 December 31, 2025:
| December 31, 2025 | ||||||||
| Total Current Assets | 935.1 | |||||||
| Goodwill | 4,221.2 | |||||||
| Intangible Assets, Net of Amortization | 1,975.0 | |||||||
| Other Noncurrent Assets | 741.7 | |||||||
| Total Noncurrent Assets | 6,937.9 | |||||||
| Total Current Liabilities | 692.7 | |||||||
| Long-Term Debt | 4,732.0 | |||||||
| Other Noncurrent Liabilities | 3,462.5 | |||||||
| Total Noncurrent Liabilities | 8,194.5 | |||||||
| Due from Non-Guarantor Subsidiaries | 284.0 | |||||||
| Due to Non-Guarantor Subsidiaries | 2,952.4 | |||||||
The following table sets forth summarized income statement information of the Obligor Group for the year ended December 31, 2025:
|
Year Ended December 31, 2025
|
||||||||
| Net Sales | 3,268.5 | |||||||
| Gross Profit | 1,266.0 | |||||||
| Income from Operations | 252.6 | |||||||
| Interest Expense | 447.4 | |||||||
| Net Loss | (192.5) | |||||||
| Net Loss Attributable to Regal Rexnord Corporation | (192.5) | |||||||
| Net Sales to Non-Guarantor Subsidiaries | 243.2 | |||||||
| Interest Expense Due to Non-Guarantors | 120.3 | |||||||
Legislative Developments
Final laws enacting the Organisation for Economic Co-operation and Development's global minimum tax framework were in force beginning in 2024 in several countries where we do business, and similar laws could be enacted in other countries where we operate. The Company continually monitors legislation updates and administrative guidance. The current impact of the global minimum tax framework is not material to the Company's results of operations.
Cash Requirements for Other Financial Commitments
The following is a summary of our future estimated cash payments by period as of December 31, 2025:
|
Payments Due by Period (1)
|
Debt Including Estimated Interest Payments (2)
|
Operating Leases | Finance Leases |
Pension and Other Post-Retirement Benefit Obligations
|
Purchase and Other Obligations | Total Contractual Obligations | ||||||||||||||||||||||||||||||||
| Less than one year | $ | 1,417.7 | $ | 47.6 | $ | 11.3 | $ | 19.8 | $ | 987.8 | $ | 2,484.2 | ||||||||||||||||||||||||||
| 1 - 3 years | 1,832.9 | 63.8 | 22.0 | 6.6 | - | 1,925.3 | ||||||||||||||||||||||||||||||||
| 3 - 5 years | 1,271.1 | 31.6 | 19.1 | 6.0 | - | 1,327.8 | ||||||||||||||||||||||||||||||||
| More than 5 years | 1,352.5 | 79.5 | 181.1 | 10.3 | - | 1,623.4 | ||||||||||||||||||||||||||||||||
| Total | $ | 5,874.2 | $ | 222.5 | $ | 233.5 | $ | 42.7 | $ | 987.8 | $ | 7,360.7 | ||||||||||||||||||||||||||
(1) The timing and future spot prices affect the settlement values of our hedge obligations related to commodities and currency exchange rates. Accordingly, these obligations are not included above in the table of contractual obligations (See also Item 7A and Note 13 of the Notes to the Consolidated Financial Statements). The timing of settlement of our tax contingent liabilities cannot be reasonably determined and they are not included in the table above. Future pension obligation payments include contributions and benefit payments. Future pension contributions after 2025 are subject to revaluation based on changes in the benefit population and/or changes in the value of pension assets based on market conditions that are not determinable as of December 31, 2025.
(2) Excludes $850.0 million for the 2025 Term Facility as there was no amount outstanding as of December 31, 2025. The Company borrowed $850.0 million under the 2025 Term Facility on February 12, 2026.
We utilize blanket purchase orders ("Blankets") to communicate expected annual requirements to many of our suppliers. Requirements under Blankets generally do not become "firm" until a varying number of weeks before our scheduled production. The purchase obligations shown in the above table represent the value we consider "firm".
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the US requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. We believe the following critical accounting policies could have the most significant effect on our reported results.
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.
For the 2025 annual goodwill test, the Company performed a quantitative assessment for five reporting units (four in the AMC segment and one in the IPS segment) and performed a qualitative assessment for all other reporting units. For the five reporting units we quantitatively tested, the discount rate used in the income approach was between 12.5% and 13.5%. Based on the results of quantitative test, the fair value of each reporting unit exceeded its carrying value and thus no goodwill impairments were recorded. The fair value exceeded carrying value by more than 10% for three of the five reporting units quantitatively tested. For each of the reporting units we qualitatively assessed in 2025, we concluded that it was more likely than not that the fair value exceeded the carrying value and thus a quantitative test was not necessary. There is inherent uncertainty included in the assumptions used in goodwill impairment testing and a change to any of the assumptions could lead to a future impairment, which could be material.
See Note 4 - Goodwill and Intangible Assets of the Notes to the Consolidated Financial Statements for more information.
Long-Lived Assets
We evaluate the recoverability of the carrying amount of long-lived assets whenever events or changes in circumstance indicate that the carrying amount of an asset may not be fully recoverable through future cash flows. When applying the accounting guidance, we use estimates to determine when an impairment is necessary. Factors that could trigger an impairment review include a significant decrease in the market value of an asset or significant negative or economic trends. For long-lived assets, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the primary asset to estimate recoverability.
Other Disclosures
Dividends
Quarterly dividends declared by Regal Rexnord Corporation's Board of Directors during the year ended December 31, 2025 and for the first quarter of 2026 were as follows:
| Period | Declaration Date | Shareholder of Record Date | Dividend Payable Date | Cash per Share | ||||||||||||||||||||||
|
First Quarter 2025
|
January 27, 2025 | March 31, 2025 | April 14, 2025 | $ | 0.35 | |||||||||||||||||||||
|
Second Quarter 2025
|
April 28, 2025 | June 30, 2025 | July 14, 2025 | $ | 0.35 | |||||||||||||||||||||
|
Third Quarter 2025
|
July 21, 2025 | September 30, 2025 | October 14, 2025 | $ | 0.35 | |||||||||||||||||||||
|
Fourth Quarter 2025
|
October 22, 2025 | December 31, 2025 | January 14, 2026 | $ | 0.35 | |||||||||||||||||||||
|
First Quarter 2026
|
January 26, 2026 | March 31, 2026 | April 14, 2026 | $ | 0.35 | |||||||||||||||||||||
Regal Rexnord Corporation published this content on February 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 20, 2026 at 22:14 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]