Regal Rexnord Q2: order growth meets margin pressure

Transcript intelligence

What changed

Compared with the prior quarter, the company maintained sales guidance but narrowed its adjusted EPS range and modestly reduced adjusted EBITDA margin guidance. Management also incorporated tariff refunds into 2026 guidance and said shippable backlog for 2027 is about 20% higher than a year ago.

Guidance delta

Sales guidance was unchanged. Adjusted EPS guidance was narrowed to $10.35–$10.85, with a $10.60 midpoint; adjusted EBITDA margin guidance was modestly reduced.

Key takeaways

• Orders grew 8.8% year over year and sales grew 4.2%, with strength in Automation & Motion Control and data center markets.
• Higher inflation, mix and tariff impacts pressured margins; adjusted EBITDA margin was 23.5%.
• The company incorporated $48 million of tariff refunds into 2026 guidance and expects net debt leverage below 3x in the second half.
• The ePOD modular power solution and its production ramp are positioned as growth initiatives; management also highlighted cross-sell integration and debt reduction.

Management priorities

• Ramp ePOD production and pursue additional orders in late 2026 and 2027.
• Continue cross-sell integration across brands.
• Reduce debt, with net debt leverage expected below 3x in the second half.
• Use price increases, surcharges and productivity initiatives to address cost pressure while protecting service levels.