On this page of StockholderLetter.com we present the latest annual shareholder letter from REGAL REXNORD CORP — ticker symbol RRX. Reading current and past RRX letters to shareholders can bring important insights into the investment thesis.

 •  3/19/2025 Letter Continued (Full PDF)
 •  3/16/2023 RRX Stockholder Letter
 •  3/13/2024 RRX Stockholder Letter
 •  More "Electronic Equipment & Products" Category Stockholder Letters
 •  RRX Benford's Law Stock Score = 95

RRX Shareholder/Stockholder Letter Transcript:

A N N U A L
R E P O R T
2 0 2 4

A MESSAGE FROM
OUR CEO
Dear Shareholders,
In 2024, we continued to make signi   cant progress
transforming Regal Rexnord into an enterprise
positioned for faster and more pro   table growth.
Early in the year, we took the    nal step in
transforming our portfolio with the divestiture of
our Industrial Systems business, enabling us to
move forward in a more strategically advantaged
position.
Our go-forward portfolio is roughly 50%-weighted
to markets with secular growth drivers, including
factory automation, food & beverage, aerospace,
medical, and data center. Financially, we achieved
adjusted gross and EBITDA margins of 37.8%* and
22.1%*, respectively, in 2024, which are top quartile
in our sector, and believe we have a clear path to
further gains. Strong annual adjusted free cash
   ow, long a hallmark of Regal, is set to improve
further, likely achieving a $1 billion annual run rate
in the next two years. Our offering is characterized
by technology differentiated products and
solutions, strong brands and channel positions,
and robust aftermarket sales. Operationally, we
have an advantaged global footprint. Our team
also continues to advance a host of organic growth
initiatives, underpinned by further investments in
research, development and engineering, and in
customer and non-customer facing technologies,
including AI.
At Regal Rexnord, our purpose is to
help create a better tomorrow with
sustainable solutions that power,
transmit and control motion.
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Our high efficiency electric motors provide the
power to create motion. Our portfolio of highly
engineered power transmission components
and solutions efficiently transmit motion from
its source to an application. And our automation
portfolio     controls, actuators, drives, software,
and small, power-dense servo motors     control
motion in applications ranging from factory
automation to precision tools used in surgical
applications.
Perhaps the most valuable characteristic of
our transformed portfolio is its unrivaled scale
and scope, both in terms of our go-to-market
capabilities, as well as the breadth of our product
offering. We are positioned to create unique
customer value propositions by leveraging our
cross-portfolio capabilities. This ranges from
innovative solutions that comprise products from
all three of our segments, to solutions that offer
convenience for customers to source most of their
power transmission needs from us as a single
provider. Our 2,000 global sales professionals allow
us to effectively market our offerings in ways our
business historically could not. In particular, our
signi   cant technology investments are making it
easier for customers to interact with Regal along
every stage of the buying journey, from product
research to product con   guration, ordering,
ful   llment, and aftermarket service and support.
Our disciplined operating model, the Regal
Rexnord Business System (   RBS   ), remains
foundational to our success. We always prioritize
safety, while relentlessly pursuing quality, and
* Excludes Industrial Systems, which was divested effective April 30, 2024.

delivering value to our customers. We are guided
by 80/20 principles, focusing the majority of our
resources on our most highly valued customers
and products. We operate with a continuous
improvement mindset, and leverage RBS across
the enterprise to remove waste and variation
from all processes, while leveraging disciplined
problem solving to quickly focus on root cause
and implement sustainable solutions. This helps us
achieve leading service levels for our customers,
which is fundamental to our value proposition and
an enabler of our growth strategy. We do all of
this in accordance with our Regal Rexnord Values,
which include executing our strategy with a sense
of urgency.
In the past year, we continued to make progress
on our strategic initiative to sell our components
as integrated solutions, which can deliver
greater quality, reliability, energy-efficiency,
and performance for our customers. Our most
signi   cant initiative in this regard remains the
industrial powertrain, where our portfolio breadth
positions us uniquely.
Regal Rexnord powertrains combine our PES
segment   s high-efficiency electric motors, and
our AMC segment   s ultra-high precision servo
motors, with the relevant power transmission
components from our IPS segment, connecting the
relevant motor to the application it is powering.
Our powertrain wins have been achieved across a
range of end markets, including general industrial,
metals & mining, food & beverage, medical,
aerospace & defense, and marine. Notably, in
the fourth quarter we announced a partnership
with a tier one aerospace customer to provide
electro-mechanical actuation subsystems for
the quickly evolving, electric vertical takeoff and
landing (eVTOL) aircraft market. The partnership
is a testament to our aerospace heritage and
pedigree, the depth and breadth of our portfolio,
our deep subject-matter expertise, and an ability
to manufacture high precision, high quality
subsystems, at scale.
Selling solutions is also one way that Regal
Rexnord is leading in the realm of sustainability,
in particular around energy efficiency. Our
contributions here are broad, with approximately
60% of our sales coming from products that
directly or indirectly help end users become more
environmentally friendly. We also continue to make
our own operations more environmentally friendly,
by investing in our building and process equipment
efficiency, including installing solar power and
water reclamation equipment at our factories. Our
efforts on these fronts were recognized in 2024
with Regal Rexnord ranking 14th on Barron   s list of
the 100 Most Sustainable U.S. Companies.
I am proud of our Regal Rexnord team, and of all
we have accomplished in 2024. But I remain even
more excited about the many opportunities for
value creation that lie ahead of us. What drives my
con   dence is the talent and engagement of our
one global team. Our 30,000 associates around the
world are engaged, disciplined, and most of all,
motivated by a passion to win with our customers.
This team is creating tremendous value for our
key stakeholders     our customers, our associates,
and our shareholders. We do so by leveraging the
power of our portfolio to provide differentiated
value for our customers and, in doing so,
accelerate pro   table growth. It is a key reason that
I am proud to be CEO of Regal Rexnord today.
Sincerely,
Louis V. Pinkham,
Chief Executive Officer
This letter contains forward-looking statements, within the meaning of the
Securities Exchange Act of 1934, as amended, as well as non-GAAP    nancial
measures. Please refer to the Cautionary Statement in our 2024 Annual
Report on Form 10-K    led with the Securities and Exchange Commission
on February 21, 2025, and the reconciliations of the non-GAAP    nancial
measures to the most directly comparable GAAP    nancial measures in our
quarterly earnings release for the quarter ended December 31, 2024.
2 0 24 A NNUA L REPO RT
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TOTAL SALES BY REGION
17%
70%
Europe
North America (NA)
7%
Asia
6%
Rest-of-World
(ROW)
REGAL REXNORD OPERATING SEGMENTS
Automation & Motion Control (AMC)
The AMC segment designs, produces and services conveyor products, conveying
automation subsystems, aerospace components, precision motion control solutions,
high-efficiency miniature servo motors, controls, drives and linear actuators, as well as
power management products that include automatic transfer switches and paralleling
switchgear. The segment sells into markets that include discrete automation, robotics,
food and beverage, aerospace, medical, general industrial, and data center.
AMC SALES BY REGION
NA 67%
Europe 23%
Asia 5%
ROW 5%
4

Industrial Powertrain Solutions (IPS)
The IPS segment designs, produces and services a broad portfolio of highly-engineered
power transmission products, including mounted and unmounted bearings,
couplings, mechanical power transmission drives and components, gearboxes
and gear motors, clutches, brakes, and industrial powertrain components
and solutions. Increasingly, the segment produces industrial powertrain
solutions, which are integrated sub-systems comprised
of Regal Rexnord motors plus the critical power
transmission components that efficiently
transmit motion to power
industrial applications.
The segment serves a
broad range of markets
that include metals and
mining, general industrial,
energy, alternative energy,
machinery /off-highway,
and discrete automation.
IPS SALES BY REGION
NA 67%
Europe 18%
Asia 7%
ROW 8%
Power Efficiency Solutions (PES)
The PES segment designs and produces fractional to
approximately 5 horsepower AC and DC motors, electronic
variable speed controls, electronic drives, fans and blowers,
as well as integrated subsystems comprised of two or more
of these components. The segment   s products are used
in residential and commercial HVAC, and a wide range of
general commercial applications.
PES SALES BY REGION
NA 78%
Europe 8%
Asia 10%
ROW 4%
2 0 24 A NNUA L REPO RT
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 3/19/2025 Letter Continued (Full PDF)