NYSE:RRX
REGAL REXNORD CORP
A global leader in engineered mechanical components offering power transmission, fluid handling, and safety solutions to automotive and industrial markets.
Key Metrics
Investment Thesis
Bull Case
The stock offers an attractive value proposition for investors seeking exposure to essential industrial components with consistent free cash flow generation exceeding $900M annually. Strong revenue growth from 2022 to 2023 and a return to profitability suggest operational leverage is being realized, providing a cushion against economic downturns while delivering shareholder returns via dividends.
Bear Case
Valuation concerns may persist given the company's significant long-term debt obligations and a retained earnings deficit of over $2B that requires time to repair. The recent revenue contraction in 2024 and 2025, combined with substantial non-operating losses, indicates potential headwinds from macroeconomic factors or customer demand shifts that could suppress future growth rates.
About REGAL REXNORD CORP
Regal Rexnord Corp designs, manufactures, and distributes high-performance mechanical components including power transmission systems, fluid handling solutions, and safety equipment primarily serving the automotive, industrial machinery, and construction sectors. With a diverse product portfolio spanning over 60 countries, the company leverages its extensive R&D capabilities to deliver durable engineered products that enhance customer operational efficiency across global supply chains.
Analysis
Management Discussion
Recent financial performance demonstrates a robust recovery with net income rising to $280.8M in 2025, driven by strong operating profit margins and effective working capital management as evidenced by healthy cash flow from operations of nearly $1B. The company successfully balanced high capital expenditures of $97.7M for strategic growth while maintaining a solid cash position, though the substantial long-term debt load of $4.76B requires careful monitoring of interest rate environments.
Industry Overview
The industrial components sector is characterized by high barriers to entry due to the rigorous engineering requirements and strict quality certifications needed for automotive and heavy machinery applications. Companies in this space face constant pressure to innovate materials and designs to meet evolving emission standards and safety regulations while managing volatile global supply chains.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $5.22B | $6.25B | $6.03B | $5.93B |
| Cost of Revenue | $3.55B | $4.18B | $3.84B | $3.72B |
| Gross Profit | $1.67B | $2.07B | $2.19B | $2.22B |
| Operating Expenses | $979.3M | $1.69B | $1.56B | $1.54B |
| Operating Income | $690.4M | $377.1M | $630.0M | $680.8M |
| R&D | $106.6M | $171.0M | $176.4M | $198.7M |
| Stock-Based Comp | $22.5M | $58.2M | $34.8M | $37.3M |
| D&A | $307.4M | $492.8M | — | — |
| Depreciation | $121.9M | $185.0M | $165.3M | $154.5M |
| Amortization | $185.5M | $307.8M | $346.5M | $346.1M |
| Other OpEx | $872.7M | $1.52B | $1.38B | $1.34B |
| Non-Operating Income | $-76.6M | $-378.7M | $-382.0M | $-328.3M |
| Interest Expense | $87.2M | $431.0M | — | — |
| Interest Income | $5.2M | $43.6M | $18.8M | $23.7M |
| Pre-Tax Income | $613.8M | $-1.6M | $248.0M | $352.5M |
| Income Tax | $118.9M | $52.7M | $49.6M | $71.7M |
| Continuing Ops | $494.9M | $-54.3M | $198.4M | $280.8M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $494.9M | $-54.3M | $198.4M | $280.8M |
| Minority Interest | $6.0M | $3.1M | $2.2M | $1.3M |
| Net to Common | $488.9M | $-57.4M | $196.2M | $279.5M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $3.00B | $3.38B | $2.75B | $2.71B |
| Cash & Equivalents | $688.5M | $574.0M | $393.5M | $521.7M |
| Accounts Receivable | $797.4M | $921.6M | $842.8M | $524.2M |
| Inventory | $1.34B | $1.27B | $1.23B | $1.32B |
| Prepaid Expenses | $150.9M | $245.6M | $267.9M | $344.7M |
| Other Current Assets | $26.8M | $368.6M | $19.6M | $0 |
| Long-Term Assets | $7.27B | $12.05B | $11.28B | $11.21B |
| Intangibles | $2.23B | $4.08B | $3.66B | $3.42B |
| Goodwill | $4.02B | $6.55B | $6.46B | $6.61B |
| Operating Leases | $110.9M | $172.8M | $141.3M | $145.2M |
| Other LT Assets | $908.8M | $1.24B | $1.02B | $1.03B |
| Total Assets | $10.27B | $15.43B | $14.03B | $13.92B |
| Current Liabilities | $1.00B | $1.33B | $1.22B | $1.26B |
| Accounts Payable | $497.7M | $549.4M | $542.8M | $607.3M |
| Current Debt | $33.8M | $3.9M | $5.0M | $24.1M |
| Current Leases | $26.4M | $37.2M | $35.6M | $38.5M |
| Other Current Liab | $421.1M | $712.7M | $609.1M | $571.2M |
| Long-Term Liabilities | $2.84B | $7.74B | $6.55B | $5.80B |
| Long-Term Debt | $1.99B | $6.38B | $5.45B | $4.76B |
| LT Operating Leases | $88.1M | $132.2M | $114.1M | $114.0M |
| Other LT Liab | $766.3M | $1.23B | $984.0M | $924.8M |
| Total Liabilities | $3.85B | $9.07B | $7.77B | $7.07B |
| Shareholders' Equity | $6.42B | $6.37B | $6.27B | $6.85B |
| Retained Earnings | $2.13B | $1.98B | $2.04B | $2.23B |
| AOCI | $-352.1M | $-282.4M | $-442.7M | $-75.4M |
| Total L&E | $10.27B | $15.43B | $14.03B | $13.92B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $494.9M | $-54.3M | $198.4M | $280.8M |
| Non-Cash Adjustments | $-120.1M | $1.31B | $353.6M | $824.3M |
| Working Capital Changes | $61.4M | $-536.8M | $57.4M | $-114.3M |
| Cash from Operations | $436.2M | $715.3M | $609.4M | $990.8M |
| Capital Expenditures | $83.8M | $119.1M | $109.5M | $97.7M |
| Cash from Investing | $-113.3M | $-4.98B | $275.4M | $-71.0M |
| Share Buybacks | $239.2M | $0 | $50.0M | $0 |
| Dividends Paid | $90.9M | $92.8M | $93.0M | $93.0M |
| Cash from Financing | $-274.2M | $4.20B | $-1.10B | $-814.1M |
| FX Effect | $-33.0M | $10.9M | $-30.8M | $22.5M |
| Net Change in Cash | $15.7M | $-53.2M | $-241.8M | $128.2M |
| Beginning Cash | $672.8M | $688.5M | $635.3M | $393.5M |
| Ending Cash | $688.5M | $635.3M | $393.5M | $521.7M |
Frequently Asked Questions
How does REGAL REXNORD CORP make money?
The company operates through key segments focused on Power Transmission (gears, clutches, belts), Fluid Handling (hydraulic pumps, filters, seals), and Safety Equipment (brake systems, air bags, seat belt components). Revenue streams are further diversified by end-market applications including automotive OEMs, aftermarket distribution, and heavy industrial equipment manufacturers.
What are the main risks for RRX?
Significant exposure to cyclical fluctuations in the global automotive industry, which can cause sharp revenue volatility as seen in recent years. Heavy reliance on large OEM customers creates concentration risk where a loss of a major contract could materially impact earnings. Rising input costs for raw materials and logistics, coupled with currency exchange rate volatility affecting international sales, pose ongoing margin pressure.
What is RRX's competitive advantage?
Regal Rexnord benefits from a deep global footprint with localized manufacturing capabilities that reduce supply chain latency for major automotive clients. The company maintains strong intellectual property rights on proprietary component designs, creating high barriers to entry for competitors attempting to replicate its specific engineering solutions in niche markets.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.