# Rexnord Corporation (RRX) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/RRX/thesis · /stocks/RRX/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: RRX
step: "04"
title: Financial Snapshot — P&L, Margins, and Three-Year View
created: 2026-05-29
---

### Step 04: Financial Snapshot

#### Three-Year Income Statement Summary

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| Revenue ($M) | $5,147 | $5,384 | ~$5,250 |
| YoY Growth | +65%* | +4.6% | ~-2.5% |
| Gross Profit ($M) | ~$1,595 | ~$1,700 | ~$1,650 |
| Gross Margin | ~31.0% | ~31.6% | ~31.4% |
| Adj. EBITDA ($M) | ~$870 | ~$1,040 | ~$1,010 |
| Adj. EBITDA Margin | ~16.9% | ~19.3% | ~19.2% |
| GAAP Operating Income ($M) | ~$320 | ~$490 | ~$480 |
| Adj. Operating Income ($M) | ~$680 | ~$835 | ~$800 |
| Adj. Operating Margin | ~13.2% | ~15.5% | ~15.2% |
| Net Interest Expense ($M) | ~$225 | ~$220 | ~$215 |
| Adj. EPS (diluted) | ~$7.50 | ~$10.20 | ~$10.00 |
| GAAP EPS (diluted) | ~$1.20 | ~$3.50 | ~$3.80 |
| Diluted Shares (M) | ~43.2 | ~42.5 | ~42.0 |

*FY2022 growth reflects first full year with Rexnord PMC consolidated (partial in FY2021).

#### Margin Walk — Adjusted EBITDA

##### FY2022 → FY2023 Improvement (+240 bps)
- Volume leverage on fixed costs: +100 bps
- Integration synergies realized: +80 bps
- 80:20 SKU simplification: +40 bps
- Price vs. cost normalization: +50 bps
- Offset: Temporary elevated integration costs: -30 bps

##### FY2023 → FY2024 Flattish (-10 bps)
- Industrial destocking headwind reduced volume absorption: -80 bps
- Continued synergy realization: +50 bps
- 80:20 benefits ongoing: +20 bps
- Price normalization (moderating from pandemic pricing): -10 bps
- Mix shift toward Climate Solutions (growing data center): +20 bps (Climate margins above average)

#### Integration Synergies Tracker

Management guided $175M in annualized cost synergies from the Rexnord PMC merger:
- **Procurement/supply chain**: ~$65M target → ~$60M realized by end-2024
- **Manufacturing footprint consolidation**: ~$55M target → ~$45M realized (plant closures ongoing)
- **SG&A/headcount rationalization**: ~$35M target → ~$32M realized
- **R&D/engineering efficiency**: ~$20M target → ~$15M realized
- **Total**: $175M target → ~$152M realized as of mid-2025 (87% completion)

Remaining $23M expected to be realized in 2025, one year ahead of the original 2026 target.

#### GAAP vs. Adjusted Reconciliation Notes

The gap between GAAP and adjusted earnings is material and persistent:
- **Amortization of acquired intangibles**: ~$220–240M per year (step-up from Rexnord merger fair value)
- **Restructuring charges**: ~$50–80M annually (plant consolidations, severance)
- **Merger transaction costs**: ~$30M (largely one-time, now winding down)
- **Stock-based compensation**: ~$35–40M annually

The amortization charge alone suppresses GAAP EPS by ~$4–5 per share annually. This is real economic cost only to the extent it reflects actual intangible asset deterioration; for acquired brands and customer relationships with long useful lives, it overstates the true economic decline.

Adjusted EBITDA ($1.0–1.1B range) is the metric management, sell-side, and credit markets use for valuation and leverage ratio calculation.

#### Revenue Bridge: Organic vs. Price/Mix/Volume

| Component | FY2023 | FY2024E |
|-----------|--------|---------|
| Organic volume | +1.5% | -3.5% |
| Pricing | +2.5% | +0.5% |
| Acquisitions | +0.5% | 0% |
| FX | +0.1% | +0.5% |
| **Total** | **+4.6%** | **~-2.5%** |

The FY2024 organic volume decline reflects the industrial MRO destocking cycle. Climate Solutions (data center driven) was a positive outlier growing mid-single digits even as Motion Control and Power Efficiency declined.

#### Cost Structure

| Cost Category | % of Revenue | Notes |
|--------------|-------------|-------|
| COGS (ex-D&A) | ~65–66% | Materials-heavy; steel, copper, rare earth magnets |
| D&A | ~7–8% | Elevated due to acquired intangible amortization |
| SG&A | ~10–11% | Being reduced via integration |
| R&D | ~1.5–2.0% | Low vs. tech; investment in motor efficiency |
| Interest | ~4.0–4.5% | Elevated due to post-merger leverage |

Key input cost exposures:
- **Copper**: ~10–12% of COGS (motor windings, cable)
- **Steel**: ~15–18% of COGS (motor housings, bearing components)
- **Rare earth magnets (NdFeB)**: ~3–5% of COGS (permanent magnet motors — growing exposure)
- **Labor**: ~20–25% of COGS (manufacturing labor, largely US and Europe)

The company has multi-year supply agreements and some formula-based price pass-through with OEM customers for copper and steel. Rare earth exposure is less hedged and is a growing concern given China's export restriction risk.

#### Free Cash Flow

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| Adj. EBITDA ($M) | $870 | $1,040 | $1,010 |
| Less: CapEx ($M) | ($170) | ($185) | ($175) |
| Less: Cash Interest ($M) | ($210) | ($215) | ($210) |
| Less: Cash Taxes ($M) | ($95) | ($135) | ($125) |
| Less: Working Capital Change ($M) | ($60) | +$40 | +$30 |
| **Free Cash Flow ($M)** | **~$335** | **~$545** | **~$530** |
| FCF Conversion (% of Adj. EBITDA) | ~38% | ~52% | ~52% |

FCF conversion was depressed in FY2022 by heavy working capital absorption (supply chain rebuilding, safety stock). FY2023–2024 working capital release has normalized conversion to ~50%+ of EBITDA, which is appropriate for an industrial with significant cash interest costs.

#### Profitability Assessment

Regal Rexnord's underlying business quality (Motion Control and Climate Solutions) is high-margin (20–25% EBITDA). The corporate average is dragged down by:
1. Power Efficiency Solutions (commodity motor market competition) at ~16–19% EBITDA
2. Heavy debt service cost consuming ~$210M of cash annually
3. Ongoing restructuring spend

As integration synergies are fully realized and leverage declines (reducing interest cost), the path to 22%+ EBITDA margins and $600M+ FCF is visible on a 3-year horizon — the core bull thesis.

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/RRX/fundamental

## Navigation

- Overview: /stocks/RRX
- Financials (this page): /stocks/RRX/financials
- Thesis: /stocks/RRX/thesis
- Investment Memo: /stocks/RRX/memo
- Coverage universe: /stocks