A maker of electric motors, drives, fans, bearings, gearboxes, and power transmission gear used in factory automation, aerospace, medical equipment, data centers, and home and commercial HVAC systems. The company formed in 2021 when Regal Beloit merged with Rexnord's motion-control business, combining names with Wisconsin roots dating to 1891. That earlier Rexnord ancestor began life as the Chain Belt Company, making steel chain belts to replace the leather drive belts on farm machinery.
AMC organic sales rose 15.6% and a $32M tariff refund lifted gross margin to 39.2%, but PES fell 6.6% organically.
A $32 million tariff refund reshaped the quarter. rose 4.2% to $1.56 billion and reached 39.2%, driven by a 15.6% organic increase in Automation & Motion Control and the one-time refund, while Power Efficiency Solutions fell 6.6% organically on residential HVAC weakness. The refund masks a business where one is accelerating and another is contracting.
Key takeaways
widened 1.5 points to 39.2%, a record, primarily because of a $32.0 million benefit from tariff refunds and higher volumes in the Automation & Motion Control (AMC) .
AMC rose 15.6%, with broad-based strength in data center, discrete automation, and aerospace & defense markets, making it the clear growth engine of the quarter.
Power Efficiency Solutions (PES) fell 6.6%, driven by weakness in residential HVAC and pool markets, a reversal from the 6.5% reported in the same quarter a year ago.
Section summaries
Management's Discussion and Analysis
Q2 2026 sales rose 4.2% to $1.56B, driven by AMC's 15.6% organic growth, while a $33M IEEPA tariff refund boosted consolidated gross margin to 39.2%.
⌄
Consolidated increased 4.2% to $1,558.4M, with growth of 3.3% led by a 15.6% surge in the Automation & Motion Control (AMC) , partially offset by a 6.6% organic decline in Power Efficiency Solutions (PES).
AMC's was broad-based with particular strength in data center, discrete automation, and aerospace & defense markets, while PES declined due to weakness in residential HVAC and pool markets.
rose 18.0% to $215.2 million and widened 1.6 points to 13.8%, as the tariff refund and AMC volume growth more than offset the PES decline and a 3.7% increase in operating expenses.
fell 66.2% to $176.7 million for the quarter, and to $191.6 million for the first half, largely because the prior year included $368.5 million in proceeds from a sale that did not repeat.
The company refinanced $1,100 million of 2026 Senior Notes with an $850 million term loan, leaving $922.5 million in outstanding after having eliminated all variable-rate debt in fiscal 2025.
What changed
The PES 's 6.6% organic decline marks a sharp reversal from the 6.5% reported in Q2 2025, settling the question of whether the North American residential HVAC recovery would sustain — it did not.
The AMC 's 15.6% answers the prior watch item on whether the 12.1% organic growth in Q1 2026 was sustainable; data center and discrete automation demand accelerated further.
The $32.0 million tariff refund was not flagged in any prior filing and represents a one-time benefit that drove the record 39.2% , meaning the underlying margin without it is closer to 37.1%.
returned to $922.5 million after the company refinanced $1,100 million of Senior Notes with an $850 million term loan, reversing the prior achievement of eliminating all variable-rate debt in fiscal 2025.
remained weak at $191.6 million for the first half, confirming the Q1 2026 watch item that the program that boosted 2025 cash flow has permanently shifted the cash conversion profile.
What to watch
Whether the PES 's 6.6% organic decline deepens or stabilizes in Q3, and whether commercial HVAC growth can offset the residential HVAC and pool market weakness that drove the contraction.
Whether the AMC sustains its 15.6% rate, or whether the data center and discrete automation demand that drove the quarter represents project timing that will normalize.
The trajectory of now that the $32.0 million tariff refund has flowed through; the underlying margin near 37.1% will be the baseline to track against the record 37.7% reported in Q2 2025.
Whether rises materially now that is back above $900 million, and whether the company prioritizes paying down the new $850 million term loan or maintains the higher variable-rate exposure.
Consolidated rose 8.3% to $611.6M, and expanded 150 to 39.2%, primarily due to a $32.0M benefit from IEEPA tariff refunds and higher volumes at AMC.
Operating expenses increased 3.7% to $396.4M, mainly from labor and benefit cost inflation and growth investments in the AMC .
fell to $191.6M for the first half of 2026 from $625.5M a year ago, largely because the prior year included $368.5M in proceeds from a sale.
The company refinanced $1,100M of 2026 Senior Notes with an $850M term loan and $72.5M in borrowings, and plans to fund remaining 2026 of ~$120M with .
Quantitative and Qualitative Disclosures About Market Risk
The company faces interest rate, foreign currency, and commodity price risks, managed through operating activities and derivatives without speculation.
⌄
Variable-rate debt totaled $922.5 million against $3.7 billion in fixed-rate debt as of June 30, 2026, with no outstanding interest rate swaps.
A 10% appreciation or in the Euro, Chinese Renminbi, or Mexican Peso would each cause a roughly $47 million gain or loss on foreign exchange contracts.
Copper hedging contracts with a of $101.6 million would see a $10.2 million gain or loss from a 10% price swing.
Unrealized after-tax hedging gains in AOCI were $4.9 million for currency and $6.6 million for commodities as of quarter-end.
The company does not hedge the translation of foreign subsidiaries' results into U.S. dollars and prohibits using derivatives for speculation.
There have been no material changes in the legal matters described in Part I, Item 3 in our Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated herein by reference. See also Note 12 - Contingencies for more information.
⌄
There have been no material changes in the legal matters described in Part I, Item 3 in our Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated herein by reference. See also Note 12 - Contingencies for more information.
Our business and financial results are subject to numerous risks and uncertainties. These risks and uncertainties have not changed materially from those reported in Part I, Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, which is in…
⌄
Our business and financial results are subject to numerous risks and uncertainties. These risks and uncertainties have not changed materially from those reported in Part I, Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated herein by reference. For additional information regarding risks and uncertainties facing the Company, please also see the information provided under the header "Cautionary Statement" contained in this Quarterly Report on Form 10-Q.