Regal RexnordRRX

The company reported adjusted earnings of $2.99 per share, which was better than the $2.58 analysts expected. This profit number was helped by a $32 million refund on tariffs, which are taxes paid on imported goods. Revenue came in at $1.56 billion, slightly below the $1.58 billion target.

What matters most for the long term is that daily orders rose nearly 9 percent. This shows strong demand for the company's motors and automation parts. Management also expects to finish the year with less debt, which is a key goal as they move away from slower industrial businesses to focus on high-growth areas like cooling systems for AI data centers.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Automation growth accelerating: Organic sales in the Automation and Motion Control segment, which excludes the impact of currency and recent acquisitions, grew 15.6% to $477.7 million. This performance was driven by strong demand in data centers, robotics, and aerospace markets, which helped push total company organic sales up 3.3%.
• Efficiency margins expanding: The adjusted gross margin, meaning the percentage of sales left after paying for production, reached 39.8% compared to 38.2% a year ago. This improvement came despite higher inflation because the company realized cost savings from its recent merger and received $32.0 million in tariff refunds.
• Debt levels improving: The company reduced its net debt leverage ratio, which measures debt against its yearly earnings, to 3.06x as of June 30, 2026. Management expects to bring this figure below the 3.0x target by the end of the year as they continue to pay down debt from their recent acquisition.
• Order momentum building: Enterprise daily orders rose 8.8% year over year, showing that customer demand is picking up even as the company faces a $5.5% drop in its residential efficiency business. These orders suggest better sales growth ahead as end markets like energy and commercial buildings stabilize.
• Annual profit outlook narrowed: Management narrowed its full year adjusted profit forecast to a range of $10.35 to $10.85 per share, keeping the midpoint at $10.60. This outlook includes a one time benefit of $0.57 per share from tariff refunds and assumes that strong demand will outweigh higher inflationary costs and slower productivity gains.

Our take: A solid quarter that proved the business can grow even when residential housing markets are weak. The 15.6% organic growth in automation is the standout, showing that the company's shift toward high tech markets like data centers is working. This performance strengthens the case for the stock as the company successfully pays down debt and integrates its recent merger.