Regal Rexnord (RRX): Data Centers. Robotics. AI. Oh My! – Kerrisdale Capital

Kerrisdale Capital Management is long shares of Regal Rexnord Corp (NYSE:RRX).

We are long Regal Rexnord, a $15 billion market capitalization leader in industrial power transmission and motion control solutions. Five years ago, Regal Beloit was largely a low- growth, HVAC-heavy, low-margin company prone to cyclicality. However, two major acquisitions have given Regal an extreme makeover. With the acquisitions of Rexnord’s Process & Motion Control business ($3.7B, 2021) and Altra Industrial Motion ($5.1B, 2023), Regal laid the foundation for a remarkable business transformation. Unfortunately, the Altra deal coincided with the onset of a three-year industrial recession, which effectively obscured the emergence of a new Regal. As well, facing a lackluster demand environment while burdened with the heavy debt load from the...