Regal Rexnord raises 2026 profit forecast, Q3 tops estimates

Regal Rexnord (RRX) said on Nov. 3 that adjusted third-quarter earnings reached $2.90 per share, topping the $2.69 consensus estimate compiled by Finnhub. The company also raised its 2026 adjusted EPS forecast while lowering its GAAP forecast after a goodwill impairment.

Revenue was $1.59 billion, in line with the $1.58 billion consensus estimate compiled by Finnhub. Sales rose 6% from a year earlier.

Here's how the company did:

• Adjusted EPS: $2.90 per share vs. $2.51 a year earlier, $2.69 expected, according to Finnhub
• Revenue: $1.59 billion vs. $1.50 billion a year earlier, in line with the $1.58 billion estimate, according to Finnhub
• GAAP EPS: a loss of 19 cents per share vs. profit of $1.20 a year earlier

Orders rose 6% from a year earlier, the company said, and data center sales rose 307%, or 169% excluding E-Pods.

2026 guidance

The company raised its 2026 adjusted diluted EPS forecast to $10.60 to $10.90, from the $10.35 to $10.85 range it gave on Aug. 5. The midpoint rises to $10.75 from $10.60. The adjusted range includes $0.58 per share of tariff refund benefits, up from $0.57 in August.

It lowered its GAAP EPS forecast to $3.76 to $4.06 per share, from $5.42 to $5.92 in August. The GAAP range includes the goodwill impairment.

Portfolio review

CEO Aamir Paul said the company has begun a comprehensive review of its portfolio, working with its Board and outside advisors. The goal is directing capital to the most attractive opportunities.

Paul said: "Today's announcement that we are exploring the sale of our autonomous mobile solutions business in the AMC segment reflects this approach." The company said it plans to share further updates when it has something definitive to share.

Segment results

Automation & Motion Control net sales were $500.6 million, up 24.5% from a year earlier. Growth included $25 million of sales related to E-Pods. The segment's adjusted EBITDA margin was 19.2%.

Industrial Powertrain Solutions net sales were $649.5 million, down 1.9% from a year earlier, as weakness in metals and mining offset strength in discrete automation and energy markets. Its adjusted EBITDA margin was 26.0%.

Power Efficiency Solutions net sales were $437.9 million, up 1.2% from a year earlier. Growth in commercial HVAC was partly offset by weakness in residential HVAC and pool markets. Its adjusted EBITDA margin was 19.7%.

Charges and cash

The company recorded a non-cash goodwill impairment of $119.3 million in the quarter, mainly related to the autonomous mobile solutions business in the AMC segment. The charge equals $1.78 per share of diluted EPS.

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization after one-time items, was $351.3 million, up from $339.4 million a year earlier. Excluding $14.7 million of tariff refund benefits, it was $337 million, which the company said was ahead of expectations.

Free cash flow was $193.7 million, up from $174.0 million a year earlier. Net debt to adjusted EBITDA, including synergies, ended the quarter at 2.9 times.