Regal Rexnord Reports $6.03 Billion in Net Sales for Fiscal Year 2024, Down 3.5%

Regal Rexnord Corporation reported a net sales figure of $6.03 billion for the fiscal year ending December 31, 2024, marking a decrease of 3.5% from the previous year's $6.25 billion. The decline was attributed to a 5.0% organic sales drop and a negative foreign currency translation impact of 0.3%, which was partially offset by a 7.5% increase in sales from acquisitions, primarily driven by the acquisition of Altra Industrial Motion Corp. The company also recognized a loss of $4.3 million related to the sale of its industrial motors and generators businesses, which closed on April 30, 2024.

In terms of profitability, Regal Rexnord's gross profit increased by 6.0% to $2.19 billion, compared to $2.07 billion in 2023. This increase was largely due to the contribution from the Altra acquisition, which added $175.2 million to gross profit, and the absence of $53.6 million in acquisition-related inventory step-up amortization that impacted the previous year. Operating expenses decreased by 7.6% to $1.56 billion, primarily due to the divestiture of the industrial motors and generators businesses, which reduced costs by $208.1 million.

Strategically, Regal Rexnord has been active in reshaping its portfolio. The company completed the sale of its industrial motors and generators businesses for $444 million, which represented a significant portion of its Industrial Systems segment. This divestiture is part of a broader strategy to focus on higher-margin segments and enhance operational efficiencies. Additionally, the acquisition of Altra for $5.1 billion has positioned Regal Rexnord as a more competitive player in the factory automation and industrial power transmission markets, with expected revenue and cost synergies contributing to future growth.

Operationally, Regal Rexnord employed approximately 30,800 associates globally as of December 31, 2024, with a notable presence in the U.S., Mexico, China, and India. The company reported a backlog of $1.71 billion, down from $1.88 billion the previous year, indicating a potential slowdown in future sales. The company also highlighted its commitment to innovation, with plans to double its new product vitality in the medium term, focusing on energy efficiency and digital capabilities.

Looking ahead, Regal Rexnord anticipates diluted earnings per share in the range of $4.42 to $5.22 for 2025, based on an effective tax rate of 21.5%. The company aims to leverage its strong cash flow generation to reduce debt and fund future growth initiatives, including potential mergers and acquisitions. However, management acknowledged various risks, including market conditions, supply chain disruptions, and the integration of acquired businesses, which could impact the company's performance in the coming year.