Regal Rexnord Corporation (NYSE:RRX) Q4 2022 Earnings Call Transcript

Chris Dankert: Got it. Understood. And then, just to put a point from the destocking commentary, it seems like that was focused specifically on climate and HVAC, again, given the order strength and backlog numbers for MCS. There’s no destocking going on in industrial or the motion control business right now, correct? It just seems like, again, your major distributors were all kind of building inventory still. Just maybe some comments on how you see channel inventory on more of the industrial and MCS businesses would be great.

Louis Pinkham: Yes. I think that’s probably about right. We see visibility through our distribution partners, their sales out, and they still seem to be fairly strong. We do not see destocking. The shorter-cycle products, the early-cycle products, bearings is an indicator and perhaps that’s a little bit slower. But overall, like I said, we were pretty pleased with our MCS order rates in January. And so, I think you’re spot on. We’re not seeing destocking in industrial, nor are we seeing destocking in MCS. I would throw pool into your — where we are absolutely seeing destocking, and we expected it, but it’s significant, and then, like you said, residential HVAC.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Louis Pinkham for any closing remarks.

Louis Pinkham: Thank you, operator. And thanks to our investors and analysts for joining us today. In summary, the Regal Rexnord team is continuing to deliver very strong performance. While we are taking a measured approach to our 2023 guidance as we head into a period of weaker macro activity, I am confident that our Regal Rexnord team can continue to create value for our customers and shareholders and open up attractive new opportunities for our associates, all by focusing on our controllable execution. We are fortunate in having so many value-creating opportunities to pursue, a clear path to higher outgrowth, plus material margin and free cash flow upside. With the highly anticipated addition of Altra, our opportunity set becomes even wider. So much to be excited about at Regal Rexnord. Thank you again for joining us today, and thank you for your interest in Regal. Have a good day.

Operator: The conference has now concluded. Thank you for attending today’s presentation, and you may now disconnect.