Regal Rexnord Q3 Sales Rise 6.1%; 2026 EBITDA Outlook Unchanged

Regal Rexnord Corp. (NYSE: RRX) reported higher third-quarter sales and adjusted earnings, led by strong growth in Automation & Motion Control, while tariff refunds provided a meaningful benefit to profitability. The company modestly raised its 2026 revenue outlook, kept its adjusted EBITDA outlook unchanged and continues to expect about $600 million of annual free cash flow.

Net sales for the quarter ended September 30 rose 6.1% to $1.59 billion from $1.50 billion a year earlier, with organic sales also increasing 6.1%. Daily orders grew 5.7%, indicating broader demand growth despite mixed order trends across the company’s three segments.

Adjusted diluted earnings per share increased 15.5% to $2.90 from $2.51. The latest result included an $0.18-per-share benefit from refunds tied to tariffs imposed under the International Emergency Economic Powers Act. Excluding that benefit, adjusted EPS was $2.72, up 8.4% year over year.

Adjusted EBITDA rose to $351.3 million from $339.4 million, but the adjusted EBITDA margin narrowed to 22.1% from 22.7%. Excluding a $14.7 million net tariff-refund benefit, the margin was 21.2%. Adjusted gross margin was 37.7%, or 36.8% without the refunds, compared with 37.6% a year earlier.

On a GAAP basis, Regal Rexnord recorded a net loss of $12.3 million, or $0.19 per diluted share, compared with net income of $80 million, or $1.20 per share, in the prior-year quarter. The latest period included a $119.3 million goodwill impairment, along with amortization, restructuring and integration-related adjustments.

Automation growth offsets softer powertrain sales

Automation & Motion Control was the principal source of third-quarter growth. Segment sales climbed to $500.6 million from $402 million, representing organic growth of 25.2%. Adjusted EBITDA rose 16.2% to $96 million, although the margin declined to 19.2% from 20.5%. Excluding a $2.6 million tariff-refund benefit, the segment’s adjusted EBITDA margin was 18.7%. Daily orders fell 4.9% from a year earlier despite the strong sales increase.

Industrial Powertrain Solutions sales declined to $649.5 million from $662.3 million, with organic sales down 1.8%. Adjusted EBITDA decreased 3.2% to $169 million, and the margin slipped to 26.0% from 26.4%. Excluding a $5.1 million tariff-refund benefit, the margin was 25.2%. However, daily orders rose 9.6%, and the company described orders and backlog as strengthening.

Power Efficiency Solutions posted sales of $437.9 million, up from $432.7 million, while organic sales increased 0.4%. Adjusted EBITDA advanced 5% to $86.3 million, and the margin expanded to 19.7% from 19.0%. The margin would have been 18.1% without a $7 million tariff-refund benefit. Daily orders increased 12%, and management said the segment’s growth outlook was supported by new air-moving solutions.

Cash flow, leverage and 2026 outlook

Third-quarter free cash flow increased to $193.7 million from $174 million, reflecting $219.8 million of operating cash flow and $26.1 million of capital spending. For the first nine months, however, free cash flow was $345.4 million, down from $752.5 million in the comparable 2025 period.

Regal Rexnord ended the quarter with $4.00 billion of net debt. Net debt was 2.96 times adjusted EBITDA, or 2.92 times adjusted EBITDA including $20 million of synergies expected within 15 months, compared with 3.3 times on the synergy-inclusive measure a year earlier.

For 2026, the company expects adjusted diluted EPS of $10.60 to $10.90, including a $0.58 benefit from tariff refunds. GAAP diluted EPS is projected at $3.76 to $4.06. Adjusted EBITDA remains forecast at $1.35 billion to $1.38 billion, including $46.6 million of tariff-refund benefits, while the midpoint of the outlook represents about 11% adjusted EPS growth.

Management expects a modest decline in adjusted EBITDA margin because of segment mix. It also projects depreciation to be lower due to reduced capital expenditures and an adjusted effective tax rate of about 20.8%, primarily reflecting tax-planning initiatives. No additional tariff-refund benefits are expected in the fourth quarter.

The outlook remains subject to risks including the company’s substantial debt, execution of expected Altra transaction synergies and integration, supplier disruptions, raw-material costs, tariffs and other trade restrictions, foreign-exchange movements, restructuring execution, shifts in customer orders and broader economic or geopolitical instability.