Company diagnostic
Industrial powertrain and motors
RRX
Regal Rexnord
Above-median gross and operating margins; the observed gap is inventory at 129.8 days, with leverage and asset utilization as directional levers.
Why now
In the news
Business health score
51
Out of 100
Addressable estimate
$27.3M addressable estimate (observed gap $27.3M)
Revenue
$5,934.5M (FY2025)
Operating margin
11.5%
As reported
Filing
Form 10-K, fiscal year 2025 (year ended December 31, 2025)
Run
November 1, 2026
Processing
5
minutes
Output
34
-page PDF and Excel model
Data quality
90
Point-in-time analysis from the filing and run date shown. The news context reflects reporting available on that date, and this page is not updated as events move on.
Score by dimension
Financial health
50
Growth potential
Strategic readiness
Market position
Innovation and digital
Operational efficiency
52
First 100-day action
Establish a cross-functional working capital task force (Supply Chain, Finance, Operations) to assess current DIO drivers, SKU velocity and supplier lead-time opportunities across all three segments.
How it compares
- Revenue growth: -1.6% vs peer median 8.9% (Well behind median)
- Gross margin: 37.4% vs peer median 36.9% (Better than median)
- Operating margin: 11.5% vs peer median 9.1% (Better than median)
- EBITDA margin: 19.9% vs peer median 14.2% (Better than median)
- Net margin: 4.7% vs peer median 6.1% (Behind median)
- Return on assets: 2.0% vs peer median 4.6% (Behind median)
- Debt to equity: 0.70x vs peer median 0.38x (Well behind median)
- Days payable outstanding: 59.6 days vs peer P75 53 days (Top quartile)
- Asset turnover: 0.43x vs peer median 0.71x (Well behind median)
- Inventory turnover: 2.81x vs peer median 3.54x (Behind median)
- Inventory days: 129.8 days vs peer median 103 days (Behind median)
- R&D, % of revenue: 3.3% vs peer median 4.6% (Well behind median)
Top three levers
Lever 1
Inventory optimization and working capital release
Why this lever
Inventory of $1.32B runs at 129.8 days against a 103-day median, a 26.8-day gap. The report points to demand-planning software, SKU rationalization and vendor-managed inventory with top suppliers across the three segments. Closing the gap would release $272.9M of cash once; the recurring benefit is the carrying cost.
Size
$27.3M a year
Carrying benefit on a one-time $272.9M cash release
Lever 2
Balance sheet deleveraging and interest expense reduction
Why this lever
Total debt of $4,788.7M carries $349.2M of annual interest, holding interest coverage to 1.95x against a 6.5x sector median. Net debt to EBITDA of 3.61x compares with a 2.0x median, and debt to equity of 0.70x with a 0.38x median. The report frames paydown as a direct allocation of free cash flow and does not size it.
Size
Directional
Not sized in the report
Lever 3
Asset utilization and capital deployment
Why this lever
Asset turnover of 0.43x trails the sector median of 0.71x. The report looks to a global footprint review, consolidation of overlapping manufacturing lines and divestiture of non-core sites. It does not size the lever.
Size
Directional
Not sized in the report
Questions for management
- What is the current status of Altra Industrial Motion integration, and what are the specific synergy targets and timelines for procurement, manufacturing footprint consolidation, and overhead elimination? How much of the anticipated annual synergies has been realized to date?
- What is driving the 7.3% decline in Automation & Motion Control operating income despite -1.6% revenue growth, and what specific actions are planned to restore segment operating margin to 12%+ levels aligned with sister segments?
- What is the detailed breakdown of the E-Pod order backlog by customer, geography, and expected shipment timeline, and what manufacturing capacity investments are required to meet delivery commitments without disrupting other segments?
Summary
Regal Rexnord closed fiscal 2025 with revenue of $5,934.5 million, down 1.6% as a 2.8% divestiture impact more than offset organic growth of 0.8%. Net income was $280.8M, a 4.7% margin. Gross margin of 37.4%, operating margin of 11.5% and EBITDA margin of 19.9% are above their peer medians, but $349.2M of interest on $4,788.7M of total debt holds interest coverage to 1.95x.
The one sized gap is inventory. Days inventory outstanding of 129.8 days trails the 103-day median by 26.8 days; closing it would release $272.9M of cash once, a one-time event rather than recurring profit. The report counts only the $27.3M annual carrying benefit as addressable and labels that figure an estimate. Deleveraging, asset utilization, the Automation & Motion Control margin and R&D-led organic growth are directional initiatives the report does not size.
The first 100-day move is a cross-functional working capital task force to assess inventory drivers, SKU velocity and supplier lead times across all three segments. Reported operating cash flow of $990.8M benefited from $372.5M of proceeds from a $400M receivables securitization facility, so cash generation should be read with that in mind.
What this report does not cover
SG&A is not separately disclosed on the income statement (it is reported within a single $1,532.5M operating expenses line), so no SG&A comparison is made. Reported operating cash flow benefited from $372.5M of proceeds from a receivables securitization facility, which the report says flatters cash flow and the 318.1% FCF conversion. Segment-level year-on-year percentages are estimated from document text, and four of the six health dimensions could not be rated from the filed data.
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