Regal Rexnord (RRX) Q1 2025 earnings summary

Executive summary

• Organic sales grew 0.7% year-over-year, with all segments exceeding guidance and notable strength in Power Efficiency Solutions, Automation & Motion Control, and Residential HVAC; total sales declined 8.4% due to divestitures and currency impacts.

• Adjusted EPS was $2.15, up 7.5% year-over-year (10% growth excluding Industrial Systems), and net income rose to $57.3M from $19.8M.

• Free cash flow increased 32% to $85.5M, with $164M of gross debt repaid in Q1.

• The company reaffirmed 2025 guidance and expects tariff mitigation actions to neutralize impacts on EBITDA and EPS.

• Completed the sale of the industrial motors and generators business, recognizing a cumulative loss of $95.4M.

Financial highlights

• Net sales were $1,418.1M in Q1 2025, down 8.4% year-over-year due to divestitures; organic sales up 0.7%.

• Adjusted gross margin reached 37.9%, up 50 bps year-over-year; adjusted EBITDA margin was 21.8%, up 30 bps.

• Adjusted EBITDA was $309.5M, up from $307.2M (excluding Industrial) in Q1 2024.

• Cash from operations was $102.3M; capital expenditures totaled $16.8M.

• Working capital stable at $1,535.0M; current ratio 2.3:1.

Outlook and guidance

• 2025 adjusted EPS guidance reaffirmed at $9.60–$10.40; GAAP diluted EPS guidance updated to $4.49–$5.29 reflecting asset sale gains.

• Tariff mitigation actions expected to fully neutralize 2025 EBITDA and EPS impacts, with margin neutrality by mid-2026.

• Free cash flow target of $700M for 2025, with an exit rate of $900M.

• Capital spending for 2025 expected to be ~$120M, funded by operating cash flows.

• Segment guidance: AMC, IPS, and PES all expected to be flat in sales for FY25, with margin improvements driven by mix and productivity.