Slide 1: Fourth Quarter Fiscal Year 2019 Financial Results
FOURTH QUARTER FISCAL YEAR 2019 FINANCIAL RESULTS May 9, 2019
Slide 2: Cautionary Statement Under the Private Securities Litigation Reform Act
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT This presentation and discussion contains certain forward-looking statements that are subject to the Safe Harbor and Cautionary language contained in the press release we issued on May 8, 2019, as well as other factors that coul
Slide 3: Strategic Update
STRATEGIC UPDATE Consolidated Rexnord • 4Q net sales increase +4% year over year, Adjusted EBITDA(1) up 6% to $120 million • Launching third phase of SCOFR structural cost reductions, targets $20 million annual savings Process & Motion Control • 4Q net sales increase +3% year over year, core growth
Slide 4: SCOFR 3.0
SCOFR 3.0 Third phase of Supply Chain Optimization & Footprint Repositioning initiatives • Investing to reduce fixed costs, enhance productivity, and improve free cash flow $20 million estimated total annual structural cost reductions by FY22 $35 million total investment includes <$10 million of
Slide 5: Strategic Positioning
STRATEGIC POSITIONING Supply Chain Free Cash Flow Optimization Expansion & & Footprint Leverage Reduction Repositioning Through-Cycle Tariff Mitigation Financial Performance & Margin Expansion 5
Slide 6: Strategic Results
STRATEGIC RESULTS Free cash flow +14% to Completed SCOFR 2.0 record $213 mm with $15 mm savings $100 mm debt decline Launched SCOFR 3.0 to Leverage ratio to 2.1x deliver $20 mm Consistently delivering Delivered 70 bps positive core growth margin expansion >$250 mm growth Advanced Centa initiatives a
Slide 7: Financial Update
FINANCIAL UPDATE Fourth Quarter Fiscal Year 2019 • Adjusted EBITDA(1) of $120 million increased 6% year over year • Net sales increased 4% year over year • Centa acquisition increased sales by 2% • Foreign currency translation decreased sales by (2%) • Core sales(1) increased 4% year over year • Ear
Slide 8: Initiating Fiscal Year 2020 Outlook
INITIATING FISCAL YEAR 2020 OUTLOOK Fiscal Year 2020 Outlook • Core sales growth(1) in low single-digit percentage range(2), net of 8020 PLS impact • 8020 PLS (product line simplification) to be 150-200 bps headwind • Adjusted EBITDA(1) in $460 - $475 million range(2) • Free cash flow(1) to exceed n
Slide 9: FY20 Outlook Adjusted EBITDA Bridge
FY20 OUTLOOK ADJUSTED EBITDA(1) BRIDGE • Assumes +LSD/MSD% core revenue growth, before Simplification impact • Simplification impact on core growth to be 150-200 bps • Assumes no additional acquisitions • Outlook includes total segment margin of approximately 24% (1) Non-GAAP measure defined, reconc
Slide 10: 4Q FY19 Summary
4Q FY19 SUMMARY 4Q FY19 4Q FY18 Change Net Sales (1) $538 $518 4% Growth from: Core 4% Acquisitions 2% Translation (2%) Adjusted EBITDA (1, 2) $120 $113 6% % of Sales 22.3% 21.8% 50 bps (1) 4Q FY18 results reflect reclassification of VAG as Discontinued Operations as a result of the sale during 3Q F
Slide 11: Process & Motion Control
PROCESS & MOTION CONTROL 4Q FY19 4Q FY18 Change End-Market Outlook Assumed in Guidance Industrial Distribution Net Sales $373 $361 3% Growth from: US & Canada Core 3% Europe Acquisitions 3% Rest of World Translation (3%) Food & Beverage: Global Adjusted EBITDA (1) $90 $85 6% Commercial Aerospace: Gl
Slide 12: Water Management
WATER MANAGEMENT 4Q FY19 4Q FY18 Change Net Sales (1) $165 $157 5% End-Market Outlook Assumed in Guidance Growth from: Core 5% Nonresidential Construction: US & Canada Acquisitions 0% Commercial & Industrial Translation 0% Institutional Residential Construction: US & Canada Adjusted EBITDA (1,2) $40
Slide 13: Cash Flow & Balance Sheet
CASH FLOW & BALANCE SHEET (1) Free Cash Flow is defined as Cash from Operations less Capital Expenditures, and is a Non-GAAP measure defined, reconciled, and discussed in the earnings release included in the Form 8-K filed with the Securities and Exchange Commission on May 8, 2019. (2) Net Debt Leve
Slide 14: Appendix
APPENDIX
Slide 15: Fiscal Year 2020 Outlook
FISCAL YEAR 2020 OUTLOOK Core sales % growth(1) + Low Single Digit (net of 150-200 bps PLS impact) Adjusted EBITDA(1) $460 - $475 million Free Cash Flow(1) > Net Income Depreciation & Amortization(2) ~ $ 86 million Interest Expense (LIBOR < 3%) ~ $ 67 million Effective Tax Rate(3) 26% - 27% Capital
Slide 16: FY19 Sales by End Market
FY19 SALES BY END MARKET PROCESS & MOTION CONTROL WATER MANAGEMENT 16
Slide 17: If-Converted Incremental Shares
IF-CONVERTED INCREMENTAL SHARES Incremental Shares Use If-Converted Method to calculate diluted EPS, Only If Dilutive Average Common from Conversion 1) Do not deduct preferred dividend from net income Stock Price (millions) 2) Add indicated incremental shares to diluted share count < $ 20.99 19.18 $
Slide 18: Calculating 4Q & FY19 Diluted Adjusted EPS
CALCULATING 4Q & FY19 DILUTED ADJUSTED EPS Fourth Fiscal Quarter Year Ended Ended ($ mi l li ons, except per-sha re amounts ) March 31, 2019 March 31, 2019 Base Methodology Adjusted Net Income (1) $ 57.4 $ 204.4 Weighted-Average Number of Shares: Diluted (thousands) 107,098 107,350 Adjusted Earnings
Slide 19: 4Q FY19 Non-GAAP Adjustments After Tax
4Q FY19 NON-GAAP ADJUSTMENTS AFTER TAX Income Impact on Pretax Tax Adjusted Adjustment Type ($ millions) Adjustment Provision (3) Net Income (4) Dividends on preferred stock $ 5.8 $ - $ 5.8 Non-controlling interest income 0.1 - 0.1 Equity method investment income (0.1) - (0.1) Discontinued operation
Slide 20: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA (S mi l l i ons ) Fourth Quarter Ended Fiscal Year Ended March 31, March 31, March 31, March 31, Adjusted EBITDA (1) 2019 2018 2019 2018 Net income (loss) attributable to Rexnord common stockholders $ 41.4 $ (67.8) $ 11.1 $ 52.7 Dividends on preferred stock 5.8 5.8
Slide 21: Reconciliation of Adjusted Net Income
RECONCILIATION OF ADJUSTED NET INCOME (S mil l ions ) Fourth Quarter Ended Fiscal Year Ended March 31, March 31, March 31, March 31, Adjusted Net Income and Earnings Per Share 2019 2018 2019 2018 Net (loss) income attributable to Rexnord common stockholders $ 41.4 $ (67.8) $ 11.1 $ 52.7 Dividends on