Regal Rexnord Q3 Sales Rise 6.1% as Goodwill Charge Drives Loss

Regal Rexnord (RRX ) reported third-quarter 2026 results on November 3, 2026, with sales rising 6.1% to $1.588 billion while a $119.3 million non-cash goodwill impairment drove a $12.3 million GAAP net loss.

The result reversed $80.0 million of net income in the third quarter of 2025. The impairment related primarily to the autonomous mobile solutions (AMS) business within Automation & Motion Control (AMC). Adjusted diluted EPS, which excludes the impairment and other specified items, rose to $2.90 from $2.51, underscoring the difference between the GAAP result and the company’s adjusted performance measure.

Company-defined adjusted EBITDA, which adjusts net income for taxes, net interest, depreciation, amortization and specified charges, increased to $351.3 million from $339.4 million. That figure included a $14.7 million net benefit from IEEPA tariff refunds; excluding those refunds, adjusted EBITDA was $337 million. Adjusted EPS also included a $0.18 net refund benefit, so the refunds contributed to both adjusted measures.

Data Centers Lift Automation Sales

Data-center sales increased 307%, or 169% excluding E-Pods. Automation & Motion Control sales reached $500.6 million, up 24.5%, including $25 million of E-Pods sales, while organic growth was 25.2%. The segment’s adjusted EBITDA margin nevertheless fell to 19.2% from 20.5%, and was 18.7% excluding net IEEPA refund benefits. Rapid sales growth therefore did not produce a higher year-over-year margin.

Other end markets were mixed. Industrial Powertrain Solutions sales declined 1.9% to $649.5 million as metals-and-mining weakness outweighed strength in discrete automation and energy. Power Efficiency Solutions sales increased 1.2% to $437.9 million, with commercial HVAC growth partly offset by residential HVAC and pool weakness. Daily orders rose 6% overall. CEO Aamir Paul reported 13% orders growth excluding data centers, 47% in commercial HVAC and 26% in discrete automation, with data-center order growth continuing to scale despite specific project-order timing effects.

Annual Earnings Guidance Moves In Opposite Directions

Regal Rexnord raised and narrowed its 2026 adjusted diluted EPS guidance to $10.60 to $10.90, with a $10.75 midpoint. Its August 5, 2026 outlook was $10.35 to $10.85 with a $10.60 midpoint. At the same time, GAAP diluted EPS guidance fell to $3.76 to $4.06 from $5.42 to $5.92, with the new reconciliation including a $1.78-per-share effect from the goodwill impairment. The updated adjusted annual outlook includes a $0.58 net benefit from IEEPA tariff refunds, compared with $0.57 in August.

Portfolio Review Follows Impairment

Four months into the CEO role, Paul has begun a comprehensive portfolio review with the Board and outside advisers to improve focus. “Ultimately the goal is directing capital to our most attractive opportunities,” he said. Regal Rexnord is exploring a sale of the autonomous mobile solutions business in the AMC segment as part of that approach. The effort remains an exploration rather than a completed transaction, with further updates promised when the company has something definitive to share.

Quarterly operating cash flow increased to $219.8 million from $197.5 million. After $26.1 million of property, plant and equipment additions, free cash flow, which Regal Rexnord defines as operating cash flow less those additions, was $193.7 million versus $174.0 million. Net debt was $4.001 billion on September 30, 2026, while net debt to adjusted EBITDA including expected synergies was 2.92 times, down from 3.06 times at June 30, 2026.

The review’s scope is now the central unresolved issue. Data centers and automation are generating growth, but the AMS impairment and possible sale show that management is reassessing the portfolio even as quarterly cash generation improves and leverage declines. Whether the process extends beyond AMS, and where Paul ultimately directs capital, remain open questions.