Regal Rexnord shares fall after Q3 earnings miss

[Permanent magnet motor disassembled close-up]
Bosca78/E+ via Getty Images

Shares of Regal Rexnord (RRX [https://seekingalpha.com/symbol/RRX]) fell 7.1% in extended trading Wednesday after the industrial manufacturer reported quarterly earnings that missed Wall Street profit estimates, even as revenue came in roughly in line with expectations.

The company reported adjusted earnings of $2.51 per share, below analysts’ forecast of $2.53, and revenue of $1.50 billion, in line with consensus estimates of $1.51 billion.

Net income rose to $79.6 million, or $1.20 a share, from $72.7 million, or $1.09 a share, a year earlier. Wall Street had projected earnings of $1.32 a share according to generally accepted accounting principles.

Regal Rexnord (RRX [https://seekingalpha.com/symbol/RRX]) in a statement said results reflected steady operational execution and strong order growth, particularly in data center, automation and industrial markets, though margins were pressured by tariffs, higher material costs, and supply constraints related to rare earth magnets.

Chief Executive Louis Pinkham said the company secured $135 million in new data center orders during the quarter and an additional $60 million early in the fourth quarter, positioning Regal Rexnord as “an emerging scale player” in that sector.

SEGMENT PERFORMANCE WAS MIXED

* Automation & Motion Control sales were flat at $402 million, as strength in aerospace and industrial automation offset softness in medical markets.
* Industrial Powertrain Solutions rose 2.8% to $662 million, supported by growth in energy and metals.
* Power Efficiency Solutions increased slightly to $433 million, driven by pool and commercial HVAC demand.

Adjusted earnings before interest, taxes, depreciation and amortization rose modestly to $339 million, while operating income was steady at $174 million, or 11.6% of sales. Cash from operations totaled $198 million, and free cash flow was $174 million.

The company lowered its full-year outlook, narrowing its adjusted earnings guidance to $9.50–$9.80 a share from a prior range of $9.70–$10.00, citing new tariffs and China trade policies affecting rare earth magnet supplies. GAAP EPS is now expected between $4.26 and $4.56.

Pinkham said the company remains focused on paying down debt and expects to reach a net leverage ratio near 3x by the end of 2025. He added that Regal Rexnord (RRX [https://seekingalpha.com/symbol/RRX]) is investing in a new 100,000-square-foot assembly facility in Texas to meet rising data center demand and anticipates mid-single-digit organic growth in the fourth quarter, followed by low- to mid-single-digit growth in 2026.

MORE ON REGAL REXNORD

* Regal Rexnord: Exposure To Two Major Tailwinds [https://seekingalpha.com/article/4832935-regal-rexnord-exposure-to-two-major-tailwinds]
* Regal Rexnord: Cycle-Proofing In Progress, Upside Ahead [https://seekingalpha.com/article/4811011-regal-rexnord-cycle-proofing-in-progress-upside-ahead]
* Regal Rexnord: Struggling Along [https://seekingalpha.com/article/4810593-regal-rexnord-struggling-along]
* Regal Rexnord Non-GAAP EPS of $2.51 misses by $0.02, revenue of $1.5B beats by $10M [https://seekingalpha.com/news/4510653-regal-rexnord-non-gaap-eps-of-2_51-misses-by-0_02-revenue-of-1_5b-beats-by-10m]
* Regal Rexnord Q3 2025 Earnings Preview [https://seekingalpha.com/news/4509501-regal-rexnord-q3-2025-earnings-preview]