Regal Rexnord’s first quarter results were shaped by higher-margin segment performance and strong execution on cost synergies, leading to operating margin improvement even as overall sales declined. Management credited growth in Residential HVAC, Aerospace, and Energy, as well as a return to growth in discrete automation, for offsetting ongoing weakness in other industrial segments. CEO Louis Pinkham highlighted the company’s ability to “deliver a really solid start to 2025 above our expectations and manage tariff impacts,” while also underscoring meaningful progress on cost control and free cash flow, which enabled continued debt reduction.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Regal Rexnord’s Q1 Earnings Call

• Mike Halloran (Baird) asked about long-cycle versus short-cycle order dynamics. CEO Louis Pinkham noted strong momentum in winning longer-cycle projects, especially in IPS, and stable short-cycle demand, with backlog growth supporting confidence in second-half forecasts.
• Julian Mitchell (Barclays) inquired about the drivers behind expected margin improvement in the second half of the year. CFO Rob Rehard cited better mix, especially from automation, volume gains, and price synergies, with tariffs expected to be fully mitigated by year-end.
• Jeff Hammond (KeyBanc Capital Markets) asked how the $130 million in tariffs will be offset. Pinkham explained supply chain realignment is the main lever, followed by production moves and pricing, and expressed confidence in achieving EBITDA neutrality.
• Kyle Menges (Citigroup) questioned whether strong order growth reflected pre-buying ahead of tariffs. Pinkham responded that only Residential HVAC saw some pre-buying, while IPS order strength was driven by long-cycle projects rather than tariff-related demand shifts.
• Nigel Coe (Wolfe Research) probed the competitive impact of tariffs and Asian competitors. Pinkham highlighted Regal Rexnord’s advantage from its in-region sourcing strategy and shift toward technology-based products, which is expected to support share gains over time.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) whether tariff mitigation actions continue to neutralize cost pressures on margins, (2) the pace of growth and margin expansion in automation and humanoid robotics, and (3) the realization of remaining cost synergies and ongoing debt reduction. Progress in these areas will be critical for sustaining earnings quality amid external uncertainties.

Regal Rexnord currently trades at $144.15, up from $110.14 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

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