Milwaukee-based manufacturer
Regal Rexnord now expects tariffs on imports from Canada, China and Mexico, as well as on steel and aluminum, will cost the business $130 million in 2025.
This follows
an earlier estimate in March that tariffs would cost the business $60 million. The increase is due to a larger than anticipated impact from Chinese tariffs.
Still, Regal Rexnord leadership does not expect the additional costs to have any impact on the business.
"Our team remains focused on execution,” said
Louis Pinkham, CEO at Regal Rexnord. “We have been aggressively implementing plans to mitigate tariff impacts, and expect to achieve tariff cost neutrality in 2025, and margin neutrality by the middle of 2026, under current tariffs.”
Regal Rexnord already has several countermeasures in play. They include supply chain realignments, product relocations, productivity measures and price increases. These actions are expected to fully mitigate any impact from tariffs this year.
"Tariff dynamics have been volatile and playing out over a relatively short period of time, so it may simply be too early to be seeing clear signs that spending will be impacted regardless," said
Rob Rehard, executive vice president and chief financial officer at Regal Rexnord. "This is something we are monitoring closely."
In the first quarter, Regal Rexnord saw growth in orders within all segments of the business. Sales in the quarter were up 7% versus the prior year. This positive momentum led the company to re-affirm its 2025 guidance Tuesday.
The company is projecting 2025 earnings per share within a range of $4.49 to $5.29.
"During this period, we have been staying close to our customers, and while they broadly acknowledge the heightened uncertainty that tariffs have caused, to date, we have seen little evidence of changes to planned spending," said Pinkham.
Robot development
During the company's quarterly earnings call, Pinkham also took time to highlight a newer product still in early stages of development: humanoid robots. The product is attracting “substantial investments” across a range of end markets.
Regal Rexnord teams have worked on humanoid robots for years, creating rescue robots for the U.S. Department of Defense and the first humanoid robot used in space by NASA.
While most of the company’s work has been tailored to very specific projects, Regal Rexnord is now working with OEMs to produce the robots on a regular basis at scale.
"We have also secured several recent wins on this front with leading humanoid manufacturers worth over $20 million in sales annually, which are scheduled to ramp over the next 12 to 18 months," said Pinkham.
He explained the emphasis being placed on reshoring could be a tailwind for Regal Rexnord’s humanoid robot business.
There’s approximately $100 million worth of business opportunities that Regal Rexnord is pursuing in this space.
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