Regal Rexnord’s second quarter saw its sales growth fall short of Wall Street’s expectations, driving a significant negative market reaction. Management attributed the shortfall to persistent weakness in residential HVAC and pool markets, as well as timing delays in large project deliveries, particularly in the Industrial Powertrain Solutions segment. CEO Aamir Paul, in his first call, emphasized the company’s strong order momentum and highlighted areas of strength such as data center, commercial HVAC, and discrete automation. CFO Rob Rehard noted, “Our team delivered solid second quarter performance… with encouraging progress in order growth and margin expansion,” but acknowledged that certain end markets remained challenging.
Is now the time to buy RRX? Find out in our full research report (it’s free for active Edge members).
Regal Rexnord (RRX) Q2 CY2026 Highlights:
- Revenue: $1.56 billion vs analyst estimates of $1.58 billion (4.2% year-on-year growth, 1.1% miss)
- Adjusted EPS: $2.99 vs analyst estimates of $2.58 (15.7% beat)
- Adjusted EBITDA: $366.6 million vs analyst estimates of $340 million (23.5% margin, 7.8% beat)
- Management reiterated its full-year Adjusted EPS guidance of $10.60 at the midpoint
- Operating Margin: 13.8%, up from 12.2% in the same quarter last year
- Organic Revenue rose 3.3% year on year (miss)
- Market Capitalization: $11.49 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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 From Regal Rexnord’s Q2 Earnings Call
- Michael Halloran (Baird) pressed on the timing for order conversion to revenue and the impact on future quarters. CFO Rob Rehard said strong order growth will drive results in 2027, but current revenue lags due to project timing.
- Jeffrey Hammond (KeyBanc Capital Markets) questioned service level issues and whether share losses were occurring. Rehard clarified that service levels have not declined, but productivity initiatives were delayed to maintain customer satisfaction.
- Kyle Menges (Citigroup) asked about data center order pipeline and slower conversion rates. Rehard confirmed the switchgear pipeline is stable, with expectations of increased shipments in the coming year.
- Nicole DeBlase (Deutsche Bank) inquired about the confidence in second-half growth guidance and the impact of price/cost dynamics. Rehard explained that robust order backlog underpins guidance, but acknowledged modest headwinds from inflation and lagging price realization.
- Christopher Dankert (D.A. Davidson) sought clarity on project roll-offs in IPS and rare earth magnet supply. Rehard noted project roll-offs are timing-related and expects backfilling in 2027, while rare earth supply for commercial uses is mostly mitigated, with defense applications facing slower approval.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace at which AMC and IPS order backlogs convert to revenue, (2) margin recovery as pricing actions and productivity measures take effect, and (3) further progress in scaling the ePOD facility and capturing data center demand. How management navigates inflation and executes on delayed projects will also be key to tracking Regal Rexnord’s trajectory.
Regal Rexnord currently trades at $174.20, down from $220.04 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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