Regal Rexnord Corporation · NYSE:RRX

Regal Rexnord — Regal Beloit — Investor Day (December 2012)

160 slides from Regal Rexnord's investor day presentation, Dec 4, 2012

Slide 1: Investor & Analyst Day 2012
Regal Beloit Corporation Investor & Analyst Day 2012 December 4, 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our management’s judgment regarding future events. In many cases, you can identify forward-looking statements by term
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures We prepare financial statements in accordance with accounting principles generally accepted in the United States (GAAP). We also disclose adjusted diluted earnings per share (EPS), adjusted gross profit, adjusted gross profit as a percentage of net sales, adjusted income
Slide 4: Agenda
Agenda Registration / Breakfast 8:00 – 8:30am Introductions and 2012 Highlights – Mark Gliebe 8:30 – 8:45am Financial Presentation – Chuck Hinrichs 8:45 – 9:00am Global C&I – Mike Wickiser 9:00 – 9:30am Global HVAC and Refrigeration – Paul Goldman 9:30 – 10:00am Break 10:00 – 10:15am Global Mechanic
Slide 5: Introductions and 2012 Highlights
Regal Beloit Corporation Investor & Analyst Day 2012 December 4, 2012 Mark J. Gliebe Chairman Chief Executive Officer Introductions and 2012 Highlights
Slide 6: Brand Video
Brand Video p 6
Slide 8: Regal Brand: Headquarters, Beloit, WI
Regal Brand Regal Headquarters, Beloit, WI p 8
Slide 9: Regal Taicang, China – From the Outside
Regal Taicang, China – From the Outside Regal Brand p 9
Slide 10: Regal Taicang, China – From the Inside
Regal Taicang, China – From the Inside Regal Brand p 10
Slide 11: Regal Baoshan, China – From the Outside
Regal Baoshan, China – From the Outside Regal Brand p 11
Slide 12: Regal Baoshan, China – From the Inside
Regal Baoshan, China – From the Inside Regal Brand p 12
Slide 13: Regal Tipp City – From the Outside
Regal Tipp City – From the Outside Regal Brand p 13
Slide 14: Regal Tipp City – From the Inside
Regal Tipp City– From the Inside Regal Brand p 14
Slide 15: Regal Indianapolis Distribution – From the Outside
Regal Brand Regal Indianapolis Distribution – From the Outside p 15
Slide 16: Regal Indianapolis Distribution – From the Inside
Regal Brand Regal Indianapolis Distribution – From the Inside p 16
Slide 17: Regal Fleet
Regal Brand Regal Fleet p 17
Slide 18: Regal at a Tradeshow in China
Regal Brand Regal at a Tradeshow in China p 18
Slide 19: This is the New Regal: Bold, Dynamic, Simple
And we’re making these bold moves with the confidence to stand out. Confidence that comes with years of industry leadership experience and a history of strong performance. Bold. This is the New Regal Our new agility makes it easier for us to respond to global customers, move into high-growth markets
Slide 20: 2012 Highlights
2012 Highlights p 20
Slide 21: 2012 Highlights: Record Performance
2012 Highlights Record Sales ($B) Record Earnings** ($M) Record Performance p 21 *2012 Estimated Sales and Adjusted Net Income. ** Adjusted Net Income. See Non-GAAP Reconciliations in Appendix.
Slide 22: Launched a Record Number of New Products
2012 Highlights Launched a Record Number of New Products p 22
Slide 23: Opened a New Hermetic Motor Plant in Taicang
2012 Highlights Opened a New Hermetic Motor Plant in Taicang p 23
Slide 24: Opened a New Generator Plant in Baoshan
2012 Highlights Opened a New Generator Plant in Baoshan p 24
Slide 25: Started Construction of a New Motor Plant in Wuxi
2012 Highlights Started Construction of a New Motor Plant in Wuxi p 25
Slide 26: Started Construction of the Unico Expansion
Started Construction of the Unico Expansion 2012 Highlights p 26
Slide 27: Opened a New Distribution Center in Indianapolis
Opened a New Distribution Center in Indianapolis 2012 Highlights p 27
Slide 28: Closed and Consolidated Facilities, Suppliers and Systems
2012 Highlights  Closed and Consolidated 4 Manufacturing Facilities  Closed and Consolidated 6 Warehouses  Rationalized 120 Suppliers  Eliminated 20 Legal Entities  Converted 3 ERP Systems p 28
Slide 29: Closed Four Bolt On Acquisitions
2012 Highlights Closed Four Bolt On Acquisitions p 29
Slide 30: Integrated the Largest Acquisition in our History
2012 Highlights Integrated the Largest Acquisition in our History p 30
Slide 31: Regal
Regal
Slide 32: Financial Presentation
Regal Beloit Corporation Investor & Analyst Day 2012 December 4, 2012 Charles A. Hinrichs Vice President Chief Financial Officer Financial Presentation
Slide 33: Financial Presentation Agenda
 Strong Growth Record of Sales and Profitability  Favorable Comparisons to Peer Groups  Focus on Free Cash Flow  Quarterly Sales Breakdown  Change in Future Reporting of Operating Metrics  Outlook for 4Q 2012 Financial Presentation Agenda p 33
Slide 34: Strong Record of Sales Growth
Strong Record of Sales Growth Sales Growth Driven by Acquisitions and Organic Growth * 2012 Estimated Sales. ($ M) p 34
Slide 35: Strong Growth Record of Profitability
Steady improvement in Operating Profit following 2008-2009 Recession Strong Growth Record of Profitability * 2012 E is Estimated Adjusted Operating Profit. 2011 is Adjusted Operating Profit. See non-GAAP reconciliations in Appendix. 2007-2010 data is actual GAAP Operating Profit. Operating Profit ($
Slide 36: Strong Growth Record of Earnings and Dividends
Strong Growth Record of Earnings and Dividends * 2012 E is Estimated Adjusted EPS. 2011 is Adjusted EPS. See non-GAAP reconciliations in Appendix. 2006-2010 data is actual GAAP EPS. 52 Year Record of Quarterly Dividends p 36
Slide 37: Favorable Comparisons to Peer Group
Favorable Comparisons to Peer Group (1) Peer Group Consists of 46 U.S. Based Industrial Manufacturers. Regal’s Sales Growth Has Consistently Outperformed the Peer Group % Sales Growth p 37
Slide 38: Total Shareholder Return Seven Year History
Total Shareholder Return Seven Year History Performance Consistent With Best in Class Industrials (1) Best In Class Industrials includes Ametek, Inc., Danaher Corporation, Emerson Electric Co., Roper Industries, Inc. and Idex Corporation. C u mu lativ e S h ar e h o ld er R e tur n 138.1% Regal 123.
Slide 39: Financial Performance Profile 2007–2011
Financial Performance Profile 2007 – 2011 Sales CAGR Performance Consistent With Best In Class Industrials Source: Capital IQ and Bloomberg Notes: CAGR represents cumulative annual growth rate for the 2007 – 2011 calendar periods. Free cash flow as a percentage of net income is defined as cash flow
Slide 40: Focus on Free Cash Flow
Focus on Free Cash Flow ($ M) 8-Year Average FCF % of Net Income 125% 8-Year Free Cash Flow Performance * 2012 E is Estimated Free Cash Flow. See non-GAAP reconciliations in Appendix. p 40
Slide 41: Effective Use of the Balance Sheet to Drive Growth
2004 2005 2006 2007 2008 2009 2010 2011 2012 Current Debt/Cap at 32.8% Debt / LTM EBITDA at 1.9x Strong Free Cash Flow Used for Debt Reduction Effective Use of the Balance Sheet to Drive Growth p 41
Slide 42: Typical Sales Breakdown by Quarter
Typical Sales Breakdown by Quarter Quarterly Sales are Balanced but 4th Quarter is Lowest p 42
Slide 43: Changes in Future Reporting of Sales Statistics
 Prior Reporting of Sales Statistics Reflected the Legacy Regal Businesses.  Starting in 4th Quarter 2012, Reporting of Sales Statistics will Reflect the Integration of the EPC Businesses. The Reporting Statistics will Continue to be the Change in Sales as Compared to the Prior Year Period. – Nort
Slide 44: 4th Quarter 2012 EPS Guidance
 4th Quarter 2012 EPS Guidance – GAAP EPS of $0.58 to $0.66 – Adjusted EPS of $0.67 to $0.75, Excluding $0.09 EPS of Restructuring Expenses  We Are Confirming the Guidance Range for Our 4th Quarter 2012 EPS – Operating Profit at Low End of Our Earlier Estimates – ETR ~14% vs 26% 4th Quarter 2012 E
Slide 45: Summary of Financial Presentation
 Strong Record of Growth in Sales and Profitability  Favorable Comparisons to Peer Groups  Focus on Free Cash Flow  Confirming Fourth Quarter Guidance Summary of Financial Presentation p 45
Slide 46: Regal
Regal
Slide 47: Commercial & Industrial
December 4, 2012 Michael R. Wickiser Sr. Vice President Commercial & Industrial Motors and Generators Regal Beloit Corporation Investor & Analyst Day 2012 Commercial & Industrial
Slide 48: Commercial and Industrial Motors and Generators Key Messages
Commercial and Industrial Motors and Generators Key Messages  Global C&I Overview  Growth Progress – 2012 and 2013  Impact of New Efficiency Regulations  New Products to Drive Growth p 48
Slide 49: C&I Product Portfolio
Commercial and Industrial Motors and Generators Product Portfolio Power Generation Broad Portfolio of Custom and General Purpose Products Power Conversion p 49
Slide 50: Motor Sales By Size
Fractional Integral Large Commercial & Industrial Motors and Generators Motor Sales By Size Broad Product Range to Satisfy Customer Needs p 50
Slide 51: Applications Served and 2013 Expectations
Commercial and Industrial Motors and Generators Applications Served 2013 Expectations Diverse Applications – Positive Outlook Commercial HVAC Pump Machinery Power Generation Distribution Other Customer Feedback Regal Forecast Commercial HVAC Pump Machinery Power Gen Distribution p 51
Slide 52: 2012 Revenues by Geography
EMEA India Australia China Commercial and Industrial Motors and Generators 2012 Revenues by Geography Asia Recovery with Moderate Growth in ROW Americas EMEA India Australia China 2013 Expectations Regal Forecast Americas p 52
Slide 53: North America C&I Growth History
North America C&I Growth History Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 2012  10 Quarters of Improved Sales  Q3 Impact – Tough Comparisons to 2011 – Slowing Demand Across Most Segments P e rce n t p 53
Slide 54: Manufacturing Production by Region
China Australia India EMEA USA Canada Mexico Commercial & Industrial Motors and Generators Manufacturing Production by Region 2012 Focus on Cost Improvements to Increase Margins  Plant Consolidation  Platform Simplification  Parts Production  Product Moves to LCR  Labor Productivity  Quality I
Slide 55: High Efficiency Motor Sales
High Efficiency Motor Sales 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Huada Dutchi Rotor CMG US NEMA Premium Canada NEMA Premium Small Motor EISA Exp Europe IE3 Energy Efficiency Legislation Providing Tailwind for Growth p 55
Slide 56: North American Motor Efficiency Regulations
EISA Integral – Already in Place EISA Expansion Rule – Effective December 2015 – $45 Million Revenue Affected Small Motor Rule – Effective March 2015 – $15 Million Revenue Affected Under Analysis – DOE Now Analyzing 2015 North American Motor Efficiency Regulations Regal Sales p 56
Slide 57: New Products: Second Generation VGreen
New Products  Second Generation VGreen for Smaller Pools  Significantly More Efficient Operation  Drop-in Replacement for Existing Pool Motors p 57
Slide 58: New Products: Generator Line Extension
New Products  Higher Output Product Line Extension  Expanded Ratings for Larger Vessels  Used to Supply Offshore Oil Rigs Generator p 58
Slide 59: New Products: Large Frame IEC Motors
New Products  Expanded North American Ratings to 1,250hp  Components from LCR, Assembly and Test in USA Large Frame IEC Motors p 59
Slide 60: New Products: Steel Mill Motors
New Products for Growth  Roller Table Motors  Supplied to Steel Mills in USA and India  More than 1,200 Motors Sold to Date Motors in Steel Mill Steel Mill Motors p 60
Slide 61: New Products: IEC High Efficiency IE3
New Products  IEC High Efficiency IE3  China Government Incentives to Promote Adoption  Europe Legislation Effective 2015  One Global Platform p 61
Slide 62: New Products: High Power Generator
New Products  High Power Generator for Growth  Jointly Developed in China and North America  Supports China Market p 62
Slide 63: New Products: Home Guard Transfer Switch
New Products  Home Guard Residential Transfer Switch  New Power Contactor Mechanisms – High Reliability p 63
Slide 64: New Products: Unico Linear Rod Pump
New Products  Unico Patented Linear Rod Pump  High Efficiency Motors and Gearboxes Motor Gearbox p 64
Slide 65: C&I Business Outlook
C&I Business Outlook  Uncertain US Economy  European Recession  Synergy Savings  Simplification  China Recovery  Energy Regulations  New Products  Sandy Effect  Adoption of Energy Regs  Oil and Gas Potential Headwinds Potential Tailwinds p 65
Slide 66: Regal
Regal
Slide 67: Global HVAC and Refrigeration
Regal Beloit Corporation Investor & Analyst Day 2012 December 4, 2012 Paul Goldman Vice President HVAC Global HVAC and Refrigeration
Slide 68: Key Messages
Key Messages  Diverse Applications and Product Offering  HVACR Overview  North American Business Overview  Efficiency trends  End market dynamics  Innovative Products p 68
Slide 69: Diversity of HVACR Applications
Diversity of HVACR Applications Space Conditioning Water Heating Refrigeration Comprehensive Industry Expertise p 69
Slide 70: High Efficiency HVACR Products
High Efficiency HVACR Products Comfort Combustion Refrigeration Highly Engineered Products p 70
Slide 71: Global HVACR Channel Sales by Geography
Global HVACR Channel Sales by Geography OEM Aftermarket North America Asia Europe p 71
Slide 72: Efficiency Standards Update
Efficiency Standards update  Lawsuit Filed by American Public Gas Association  DOE in Settlement Talks to Resolve Conflicts  Energy Star Requirements Continue to Increase High Efficiency Motor Requirements  Pending Furnace Fan Standard Requires Higher Efficiency Motors  New Europe Fan Efficienc
Slide 73: R22 Dryship Update
R22 “Dryship” Update 2012 Industry Mix R22 Units * R 22 R 410A * Sources: AHRI, HARDI, Management estimates Background  EPA Regulates R22 Consumption  Refrigerant phase out 2020  AC Phase Out in 2010  OEMs Utilize Loophole in 2010 Impact On Regal  No Longer a YOY Negative Impact  Shift Back to
Slide 74: Resi HVAC Indicators
Resi HVAC Indicators * Sources: Census Bureau, NEMA Regal Impact  Increasing Sales of Existing Homes Improves System Replacement Sales  Potential Release of Pent-up Demand Still out There Housing Starts * (Million units, SAAR)  Consumer Confidence Up  Housing Prices Plateau  Mortgage Rates Low
Slide 75: Innovation for Performance and Cost
Innovation for Performance and Cost Performance Leadership  Efficiency  Reliability  Ease of Use Operational Leadership  Cost  Quality  Delivery EON Addressing Customer Needs Standard p 75
Slide 76: Resi HVAC Performance Airflow Leadership
Resi HVAC Performance Airflow Leadership Before Now Standard Blower p 76
Slide 77: Resi HVAC Cost
Resi HVAC Cost  6th Major ECM Platform  Latest Technology  Smaller size  Lower weight  Best Value Delivering Customer Value p 77
Slide 78: New Product Growth
New Product growth Noise Efficiency Bath Vent Fan Commercial Refrigeration 50% Reduction 50% Improvement p 78
Slide 79: Premix Segment Opportunities
Premix Segment Opportunities Gas Premix Blower  US Commercial Boiler Segment Growing Due to Emissions Regulations  Europe Residential Heating Already Using Hydronics Commercial Boiler Provides New Growth Opportunity  Attractive, New Growth Segment  Launched New Product Family in 2012  Existing
Slide 80: Aftermarket - Retrofit Evergreen Brand Products
Aftermarket - Retrofit Evergreen Brand Products * Sources: Management estimates Results  Dedicated Team on Opportunities  Multigenerational Product Development  New Sustainable Business Model Motors Installed Base * Approach  Combined 3 Sales Teams  Deep And Broad Selling Talent  Smart / Speci
Slide 81: HVACR Business Outlook
HVACR Business Outlook Potential Headwinds  Cautious Customers  Regional Standards Delay  Competitive Dynamics Potential Tailwinds  Housing Recovery  R22 no Longer a Drag  Energy Efficiency Retrofits  Long Term High Efficiency Trends  Release of Pent Up Demand p 81
Slide 82: Regal
Regal
Slide 83: Global Mechanical Group
Regal Beloit Corporation Investor & Analyst Day 2012 December 4, 2012 Global Mechanical Group Duke Sims Vice President Mechanical Group
Slide 84: Financial Performance: Profitable Business
$23.6 $37.5 1 2 $201 $295 1 2 Financial Performance Profitable Business Sales ($ M) Operating Profit ($ M) 2006 Q3 2012 (LTM) 2006 11.7%* Q3 2012 (LTM) 12.7%* *Percentage of Sales p 84
Slide 85: Product Portfolio
Electrical Power Distribution Power Transmission Broad Portfolio of Custom and General Industrial Products Product Portfolio Specialty Products p 85
Slide 86: Power Transmission Applications
Power Transmission Applications Applications Served 2013 Expectations Industrial Machinery & Material Handling Oil & Gas Recreation Const & Allied Equip Electrical Power & Control Distribution Food/Beverage & Packaging Power Generation Agriculture Industrial Machinery & Handling Food/Beverage & Pack
Slide 87: Sales Overview
Sales Overview OEM End User Distribution Sales Area of World Channel of Distribution Europe Canada Mexico ROW USA p 87
Slide 88: Brand Portfolio
Brand Portfolio GROVE GEAR DURST [)MARATHON® MASTERGEAR ISRECIAL PRODUCTS WORLDWIDE Zu) MILWAUKEE Zs GEAR Z Z
Slide 89: New Products Driving Growth
2008 2009 2010 2011 2012 E New Product Sales $(MM ) New Products Driving Growth 1 3 10 10 14 2008 2009 2010 2011 2012 $44 $46 $76 $85 $86 $(M) New Products Launched Products Introduced Last 3 Years p 89
Slide 90: Growth Catalysts
Growth Catalysts  Expand New Product Sales  Finalize Simplification of Design Platforms  Sell System Solutions  Continue Focus on Custom Product Sales p 90
Slide 91: New Product Launches in 2012
New Product Launches in 2012 Construction & Allied Equipment Agriculture Recreation  Industrial Machinery & Material Handling    Oil & Gas  Food/Beverage & Packaging     High Efficiency p 91
Slide 92: New Product – HERA
New Product – HERATM  High-Efficiency Drop-In for Worm Gear Products  Four Models Replace 12 Worm Reducer Sizes Modular Design = Significant Inventory Reduction p 92
Slide 93: HERA-MAX Drive System
HERA-MAX Drive™ System  Interchangeable with Most Leading Brands  2X Torque Density  Half the Size, Half the Weight  40% Energy Savings p 93
Slide 94: Product Simplification – Mobile Equipment Pump Drive
Product Simplification – Mobile Equipment Pump Drive  Consolidated Multiple Design Platforms to One  Reduced Component Part Count by 74%  Only 96 Total Components Required to Build 11 Model Family  3 Weeks Leadtime Reduced to 5 Days Low Inventory Requirements = Distributor Friendly Product Pump
Slide 95: Product Simplification – Transfer Case
Product Simplification – Transfer Case  Common Components with Pump Drive  55% Fewer Parts  Shorter Lead Times Simplification Driving Growth Transfer Case p 95
Slide 96: Custom Product – Turning Gear
Custom Product – Turning Gear  Accelerates/Decelerates Large Turbines  Packaged with Marathon Motor p 96
Slide 97: Systems Solution – Unico Pump System
Systems Solution – Unico Pump System System Solutions Driving Growth Gearbox Gearbox p 97
Slide 98: Mechanical Business Outlook
Mechanical Business Outlook  Restructuring Benefits  Growth in Key Industrial Segments  Custom Product Solutions  Simplification Benefits  New Product Engine  European Economy  Mature Markets  Customers Slow to Adopt New Technology Potential Headwinds Potential Tailwinds p 98
Slide 99: Regal
Regal
Slide 100: Operations Update
Regal Beloit Corporation Investor & Analyst Day 2012 December 4, 2012 Operations Update Scott D. Brown Senior Vice President Manufacturing
Slide 101: EPC Synergy Update
Capital and Expense – As Presented 8/23/2011 Gross Synergy Run Rate - As Presented 8/23/2011 ($ M) ($ M) Plan to Exceed Synergy Savings Earlier Gross Synergy Run Rate – Current View Capital and Expense – Current View EPC Synergy Update p 101
Slide 102: EPC Restructuring Update
EPC Restructuring Update Sourcing Touching > 65 Suppliers 85% Accomplished Logistics 45 Unique Projects Major Consolidations Complete Manufacturing 2 Plants Already Exited 2 Plants in Process Complete by Mid 2013 Savings By Year ($ M) p 102
Slide 103: North America Warehouse Restructuring
North America Warehouse Restructuring Consolidating Central US Warehousing - 5  2  Lower Costs – 11% Headcount Reduction – 24% Lower Rent – 14% Footprint Reduction  Improved Service p 103
Slide 104: Juarez Manufacturing Restructuring
Juarez Manufacturing Restructuring  10 to 5 rooftops  27% Reduction ft2 (330K ft2)  25% Reduction Indirect/Salary Headcount  Focused Factories p 104
Slide 105: Advance Manufacturing Technology
Advance Manufacturing Technology  75% Reduction in Cycle Time, Labor Costs, and Footprint  Six Sigma Quality Levels 0.00001” Precision p 105
Slide 106: China Relocations
China Relocations Generators Baoshan Q4 2012  Lean Layouts  Reduced Cycle Times  Improved Quality  Improved Work Environment  Positioned For Growth Hermetic Motors Taicang Q4 2012 IHP Motors Wuxi Q1 2014 p 106
Slide 107: China Relocations
China Relocations REGAL p 107
Slide 108: China Relocations: Single Piece Flow
China Relocations Single Piece Flow p 108
Slide 109: China Relocations: Manufacturing Cells
China Relocations Manufacturing Cells p 109
Slide 110: China Relocations: Visual Management
China Relocations Visual Management p 110
Slide 111: Europe Operations
Europe Operations  Formed One C&I Motor Business in Europe by Consolidating Operations and Support Staff  Merged 3 UK Sites into One  Exited Elco Spain Operation  Exited 5 Sites, ~25% SG&A Reduction p 111
Slide 112: Australia Operations
Australia Operations  Moved Australia Motor Production to Thailand on Single Platform  Merged 3 Assembly Operations into One  Merged 3 Distribution Businesses into One  Exited 12 Sites, Eliminating 12 Legal Entities, 19% Headcount Reduction p 112
Slide 113: Regal Lean Journey
REGAL Lean Journey 2005 2010 2015 Building Culture Embedding Regal Culture Centralized LSS Org LSS Training & Projects 243 Blackbelts 1,874 Greenbelts 108 Lend Forwards 1,300 Kaizens 10,000 Participants 600,000 hours training Best Practices  Standards CI Driven From the Field p 113
Slide 114: Lean Best Practices: U Shaped Cells
Lean Best Practices U Shaped Cells p 114
Slide 115: Lean Best Practices: Visual Control of WIP Inventory
Lean Best Practices Visual Control of WIP Inventory p 115
Slide 116: Lean Best Practices: One Piece Flow
Lean Best Practices One Piece Flow Points Of Use Materials p 116
Slide 117: Lean Best Practices: Manufacturing Cells
Lean Best Practices Manufacturing Cells p 117
Slide 118: Lean Best Practices: Team Performance Boards
Lean Best Practices Team Performance Boards p 118
Slide 119: Lean Best Practices: Andons and Help Chains
Lean Best Practices QUALITY MATERIALS ENGINEERING MAINTENANCE SEQUENCE IN PROCESS CHANGEOVER Andons and Help Chains p 119
Slide 120: Lean Best Practices: Visual Management
Lean Best Practices Visual Management p 120
Slide 121: Lean Best Practices: Total Productive Maintenance
Lean Best Practices BEFORE AFTER Total Productive Maintenance p 121
Slide 122: Lean Best Practices: Standard Work
Lean Best Practices Standard Work p 122
Slide 123: High Energy Teams
High Energy Teams 13,000 Participants # of Kaizens p 123
Slide 124: Problem: MTBF = 5,224 Minutes
Problem MTBF = 5,224 Minutes p 124
Slide 125: Regal Kaizen Team
REGAL Kaizen Team TJ * s
Slide 126: The Variables
The Variables Misalignment Belt Material Setup p 126
Slide 127: Solution: Before and After MTBF
Solution Before After MTBF - Minutes p 127
Slide 128: Operations Recap
Operations Recap  $38M EPC Synergy Savings  27 Less Rooftops  700K+ ft2 Reduction  Improved Service  New Lean China Plants  Accelerating Continuous Improvement More To Come….Simplification p 128
Slide 129: Regal
Regal
Slide 130: Simplification
Regal Beloit Corporation Investor & Analyst Day 2012 December 4, 2012 Jonathan J. Schlemmer Chief Operating Officer Simplification
Slide 131: Synergies and Simplification
Synergies and Simplification $38M Synergies Simplification p 131
Slide 132: Simplification Initiative Reduction Targets
Simplification Initiative Reduction Targets ERPs Factories Warehouses Design Platforms Entities Suppliers Brands 2011 3 2 0 2 10 50 2 Next 3 Years ~ 6 ~ 6 ~ 10 ~ 8 ~ 20 ~ 500 ~ 10 Improve Margins, Easier to do Business 2012 3 4 6 2 20 120 2 p 132
Slide 133: Simplification Initiative Reduction Targets
Simplification Initiative Reduction Targets ERPs Factories Warehouses Design Platforms Entities Suppliers Brands 2011 3 2 0 2 10 50 2 Next 3 Years ~ 6 ~ 6 ~ 10 ~ 8 ~ 20 ~ 500 ~ 10 Improve Margins, Easier to do Business 2012 3 4 6 2 20 120 2 p 133
Slide 134: One Regal – Brand Simplification
One Regal – Brand Simplification Unifies Employees with a Simple, Bold, Dynamic Corporate Brand  Presents One Face to the Customer, with Strong Global Product Brands p 134
Slide 135: One Regal – Brand Simplification
One Regal – Brand Simplification One Unifying Corporate Brand Three Global Product Brands p 135
Slide 136: Simplification Initiative Reduction Targets
Simplification Initiative Reduction Targets ERPs Factories Warehouses Design Platforms Entities Suppliers Brands 2011 3 2 0 2 10 50 2 Next 3 Years ~ 6 ~ 6 ~ 10 ~ 8 ~ 20 ~ 500 ~ 10 Improve Margins, Easier to do Business 2012 3 4 6 2 20 120 2 p 136
Slide 137: Supplier Consolidation and Sourcing
 Creation of Strong Centralized Function  Tie with Overall Simplification Plan  Broader Use of E-Auctions Supplier Consolidation Direct Materials Suppliers Indirect MRO Suppliers  Streamline Indirect Organization  Increase Engagement with Key Distributors  Regionalized MRO Approach p 137
Slide 138: Supplier Example – Lead Wire
Supplier Example – Lead Wire  12 Suppliers Reduced to 6  Average Lead Time Reduced from 12 Days to 7  11.5% Material Cost Reduction  40% Freight Savings p 138
Slide 139: Simplification Initiative Reduction Targets
Simplification Initiative Reduction Targets ERPs Factories Warehouses Design Platforms Entities Suppliers Brands 2011 3 2 0 2 10 50 2 Next 3 Years ~ 6 ~ 6 ~ 10 ~ 8 ~ 20 ~ 500 ~ 10 Improve Margins, Easier to do Business 2012 3 4 6 2 20 120 2 p 139
Slide 140: Design Platforms – Worm Gears
Design Platforms – Worm Gears  6 Platforms to 2  Already Complete  Last Phase is Standardizing to 1 Platform  Over 300 Components Eliminated  Begin Equipment Installation in 2Q13, Complete by 4Q13 Enables Supply Chain Savings, Inventory & Asset Reduction p 140
Slide 141: Design Platforms – Frame Motors
Design Platforms – 56 Frame Motors  7 Platforms to 1  “Best of the Best” Strategy  Meet 2015 Efficiency Requirements  Begin Production by 3Q13 with Complete Phase Out Over 3 Years Enables Supply Chain Savings, Inventory & Asset Reduction p 141
Slide 142: Design Platforms – International IHP
Design Platforms – International IHP  Standardized Global IHP Platform  Premium Efficiency Level  One Platform for Asia, Europe, ROW  Phased Production from 2Q13 to 2Q14 Enables Supply Chain Savings, Inventory & Asset Reduction p 142
Slide 143: Simplification Initiative Reduction Targets
Simplification Initiative Reduction Targets ERPs Factories Warehouses Design Platforms Entities Suppliers Brands 2011 3 2 0 2 10 50 2 Next 3 Years ~ 6 ~ 6 ~ 10 ~ 8 ~ 20 ~ 500 ~ 10 Improve Margins, Easier to do Business 2012 3 4 6 2 20 120 2 p 143
Slide 144: Warehouses – What's Next?
Warehouses – What’s Next?  Consolidation in Other Regions  Consolidation Opportunity Across Businesses  In-sourcing by Utilizing Open Manufacturing Space Created by Lean Efforts p 144
Slide 145: Simplification Initiative Reduction Targets
Simplification Initiative Reduction Targets ERPs Factories Warehouses Design Platforms Entities Suppliers Brands 2011 3 2 0 2 10 50 2 Next 3 Years ~ 6 ~ 6 ~ 10 ~ 8 ~ 20 ~ 500 ~ 10 Improve Margins, Easier to do Business 2012 3 4 6 2 20 120 2 p 145
Slide 146: Manufacturing – What's Next?
Manufacturing – What’s Next? Target Commercial & Industrial Motors 2 Fractional Motors 2 China Fractional HP Motors 1 China Industrial Motors 1 p 146
Slide 147: Simplification Initiative Reduction Targets
Simplification Initiative Reduction Targets ERPs Factories Warehouses Design Platforms Entities Suppliers Brands 2011 3 2 0 2 10 50 2 Next 3 Years ~ 6 ~ 6 ~ 10 ~ 8 ~ 20 ~ 500 ~ 10 Improve Margins, Easier to do Business 2012 3 4 6 2 20 120 2 p 147
Slide 148: ERP Consolidation
ERP Consolidation % Sites (On Common ERP Platform) 9% 56% 76% 32% 63% 72% % Sales (On Common ERP Platform) p 148
Slide 149: What Does It All Mean?
What Does It All Mean? $38M Synergies Simplification Mid Teens Contributor p 149
Slide 150: Operating Profit Improvement
Operating Profit Improvement 11.0% Mid Teens Management Assumptions: N America GDP 2.5%, Asia Recovery, Stabilized Commodities * Q3 2012 YTD adjusted operating margin p 150
Slide 151: Regal
Regal
Slide 152: Continuing the Long Term Growth Trajectory
2009 2010 2011 2012 2015 Continuing the Long Term Growth Trajectory $1,826 CAGR 14% As Presented at the 2010 RBC Analyst Day 2011 Actual and 2012 Current Estimate Revenue Projection Well On Our Way to Achieving Our Goal! p 152
Slide 153: Closing Thoughts
Closing Thoughts  2012 a Record Year  Tremendous Operational Accomplishments  New Products Fueling Future Organic Growth  Energy Efficiency a Long Term Driver  Delivering on Synergies  Simplification Benefits Still to Come  End Markets Remain Uncertain p 153
Slide 154: Questions & Answers
REGAL Questions & Answers
Slide 155: Regal
Regal
Slide 156: Non-GAAP Reconciliations
Fiscal Year Nine Months Ended 2011 September 29, 2012 GAAP Income form Operations 255.7$ 265.7$ EPC Purchase Accounting Adjustments and Acquisition Costs 41.3 - Incremental Warranty Accrual 12.6 - Gain on Divestiture (6.5) - Gain on Disposal of Real Estate - (1.30) Restructuring Costs 5.8 5.70 Adjus
Slide 157: Free Cash Flow Reconciliation
(Dollars in Millions) 2005 2006 2007 2008 2009 2010 2011 Cash Flow from Operation $112.2 $93.5 $200.6 $154.2 $314.9 $175.4 $265.3 Capital Expenditures (28.3) (52.5) (36.6) (52.2) (33.6) (45.0) (57.6) Free Cash Flow $83.9 $41.0 $164.0 $102.0 $281.3 $130.4 $207.7 Free Cash Flow Reconciliation Appendix
Slide 158: EBITDA Reconciliation
Appendix Non-GAAP Reconciliations EBITDA Reconciliation Dollars in Millions 4Q 2011 1Q 2012 2Q 2012 3Q 2012 LTM Net Income $33.5 $48.7 $62.7 $54.3 199.2 Plus: Minority Interest 0.3 1.2 1.6 0.9 4.0 Plus: Taxes 14.7 17.8 28.2 17.9 78.6 Plus: Interest Expense 10.7 11.8 11.2 10.6 44.3 Less: Interest Inc
Slide 159: Estimated Adjusted EPS and Income Reconciliation
Full Year Full Year 2012 Est. 2012 Est. From To GAAP Diluted Earnings Per Share 4.52$ 4.60$ Restructuring Costs 0.18 0.18 Gain on Disposal of Real Estate (0.02) (0.02) Prior Year Tax Benefit (0.05) (0.05) Adjusted Diluted Earnings Per Share 4.63$ 4.71$ Full Year Full Year 2012 Est. 2012 Est. From To
Slide 160: Estimated Adjusted Net Income
Full Year Full Year 2012 Est. 2012 Est. From To 3 Q 2012 GAAP Net Income Attributable to Regal Beloit 190$ 193$ Restructuring Costs 8 8 Gain on Disposal of Real Estate (1) (1) Prior Year Tax Benefit (2) (2) Adjusted Diluted Earnings Per Share 195$ 198$ Appendix Non-GAAP Reconciliations Estimated Adj

Regal Beloit — Investor Day (December 2012) on 6ix

Regal Rexnord — Regal Beloit — Investor Day (December 2012)

Slide 1: Investor & Analyst Day 2012

Slide 2: Safe Harbor Statement

Slide 3: Non-GAAP Financial Measures

Slide 4: Agenda

Slide 5: Introductions and 2012 Highlights

Slide 6: Brand Video

Slide 7: = °o <7 =) © = ne] < © ese a © D ®

Slide 8: Regal Brand: Headquarters, Beloit, WI

Slide 9: Regal Taicang, China – From the Outside

Slide 10: Regal Taicang, China – From the Inside

Slide 11: Regal Baoshan, China – From the Outside

Slide 12: Regal Baoshan, China – From the Inside

Slide 13: Regal Tipp City – From the Outside

Slide 14: Regal Tipp City – From the Inside

Slide 15: Regal Indianapolis Distribution – From the Outside

Slide 16: Regal Indianapolis Distribution – From the Inside

Slide 17: Regal Fleet

Slide 18: Regal at a Tradeshow in China

Slide 19: This is the New Regal: Bold, Dynamic, Simple

Slide 20: 2012 Highlights

Slide 21: 2012 Highlights: Record Performance

Slide 22: Launched a Record Number of New Products

Slide 23: Opened a New Hermetic Motor Plant in Taicang

Slide 24: Opened a New Generator Plant in Baoshan

Slide 25: Started Construction of a New Motor Plant in Wuxi

Slide 26: Started Construction of the Unico Expansion

Slide 27: Opened a New Distribution Center in Indianapolis

Slide 28: Closed and Consolidated Facilities, Suppliers and Systems

Slide 29: Closed Four Bolt On Acquisitions

Slide 30: Integrated the Largest Acquisition in our History

Slide 31: Regal

Slide 32: Financial Presentation

Slide 33: Financial Presentation Agenda

Slide 34: Strong Record of Sales Growth

Slide 35: Strong Growth Record of Profitability

Slide 36: Strong Growth Record of Earnings and Dividends

Slide 37: Favorable Comparisons to Peer Group

Slide 38: Total Shareholder Return Seven Year History

Slide 39: Financial Performance Profile 2007–2011

Slide 40: Focus on Free Cash Flow

Slide 41: Effective Use of the Balance Sheet to Drive Growth

Slide 42: Typical Sales Breakdown by Quarter

Slide 43: Changes in Future Reporting of Sales Statistics

Slide 44: 4th Quarter 2012 EPS Guidance

Slide 45: Summary of Financial Presentation

Slide 46: Regal

Slide 47: Commercial & Industrial

Slide 48: Commercial and Industrial Motors and Generators Key Messages

Slide 49: C&I Product Portfolio

Slide 50: Motor Sales By Size

Slide 51: Applications Served and 2013 Expectations

Slide 52: 2012 Revenues by Geography

Slide 53: North America C&I Growth History

Slide 54: Manufacturing Production by Region

Slide 55: High Efficiency Motor Sales

Slide 56: North American Motor Efficiency Regulations

Slide 57: New Products: Second Generation VGreen

Slide 58: New Products: Generator Line Extension

Slide 59: New Products: Large Frame IEC Motors

Slide 60: New Products: Steel Mill Motors

Slide 61: New Products: IEC High Efficiency IE3

Slide 62: New Products: High Power Generator

Slide 63: New Products: Home Guard Transfer Switch

Slide 64: New Products: Unico Linear Rod Pump

Slide 65: C&I Business Outlook

Slide 66: Regal

Slide 67: Global HVAC and Refrigeration

Slide 68: Key Messages

Slide 69: Diversity of HVACR Applications

Slide 70: High Efficiency HVACR Products

Slide 71: Global HVACR Channel Sales by Geography

Slide 72: Efficiency Standards Update

Slide 73: R22 Dryship Update

Slide 74: Resi HVAC Indicators

Slide 75: Innovation for Performance and Cost

Slide 76: Resi HVAC Performance Airflow Leadership

Slide 77: Resi HVAC Cost

Slide 78: New Product Growth

Slide 79: Premix Segment Opportunities