Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Q3 2023 Earnings Presentation
32 slides from Regal Rexnord's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Earnings
Creating a better tomorrow™… Third Quarter 2023 Earnings November 2, 2023 Moti Louis Pinkham, Chief Executive Officer on Co Indus Rob Rehard, Executive Vice President, Chief Financial Officer ntrol trial S Solut ystem ions s
Slide 2: 3Q 2023 Forward Looking Statements
3Q 2023 FORWARD LOOKING STATEMENTS This release contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which reflect Regal Rexnord’s current estimates, expectations and projections about Regal Rexnord’s future results, performance,
Slide 3: 3Q 2023 Non-GAAP Financial Measures
3Q 2023 NON-GAAP FINANCIAL MEASURES We prepare financial statements in accordance with accounting principles generally accepted In addition to these non-GAAP measures, we use the term “organic sales growth” and "pro in the United States of America (“GAAP”). We also periodically disclose certain fina
Slide 4: Opening Comments & Overview
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 3Q 2023 Results, 2023 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 5: 3Q 2023 Opening Comments & Overview
3Q 2023 OPENING COMMENTS & OVERVIEW • Third Quarter Characterized By Solid Execution On FCF & Pro Forma Adjusted Pro Forma Adjusted Adj. EBITDA Margins In The Face Of Weaker End Markets Net Sales* EBITDA* & Margin* • Announced Agreement To Sell Industrial Motors & Generators Businesses For Proceeds
Slide 6: Aerospace & Defense Overview
3Q 2023 AEROSPACE & DEFENSE OVERVIEW Profile Key End Markets • Sales of ~$350 Million Growth drivers include electrification of commercial & military aircraft, driven by environmental objectives, along with geopolitical tensions & supply chain risk management • 2023 Outlook +20% Organic Growth • 3Y
Slide 7: 3Q 2023 Results, 2023 Outlook
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 3Q 2023 Results, 2023 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 8: Automation & Motion Control
3Q 2023 AUTOMATION & MOTION CONTROL Sales Pro Forma Adjusted Pro Forma Adjusted Net Sales* ($M) EBITDA* ($M) & • Pro Forma Organic Net Sales ~Flat EBITDA Margin* • Key Drivers $420.8 $419.8 o Data Center (+) o Aerospace (+) o Medical (+) $100.4 o Factory Automation (-) $95.4 22.7% 24.0% 3Q22 3Q23 3Q
Slide 9: Industrial Powertrain Solutions
3Q 2023 INDUSTRIAL POWERTRAIN SOLUTIONS Sales Pro Forma Adjusted Pro Forma Adjusted • Pro Forma Organic Net Sales* Down Net Sales* ($M) EBITDA* ($M) & 3.7% EBITDA Margin* • Key Drivers $653.7 o General Industrial (-) $640.7 o Agriculture (-) $53. o Energy (+) $235.2 5 $163.2 $43. $138.9 o Metals & M
Slide 10: Power Efficiency Solutions
3Q 2023 POWER EFFICIENCY SOLUTIONS Sales Adjusted Net Sales* Adjusted EBITDA* ($M) • Organic Sales* Down 19.1% ($M) & EBITDA Margin • Key Drivers o N.A. Residential HVAC (-) $165. $94.3 $90.7 o China & Europe (-) 5 $39.0 o U.S. General Commercial (-) $569.1 $135. $461.3 7 $21.3 16.6% 19.7% 3Q22 3Q23
Slide 11: Other Financial Updates
3Q 2023 OTHER FINANCIAL UPDATES Capital Expenditures Balance Sheet at September 30, 2023 • $25.2 Million in 3Q 2023 • Total Debt of $6,497.6 Million • Net Debt* of $5,898.8 Million • Net Debt*/Normalized Adj. EBITDA* of 3.86** Effective Tax Rate (ETR) • Interest Coverage Ratio Of 3.24** • 23.7% Adj.
Slide 12: End Market Growth Update
3Q 2023 END MARKET GROWTH UPDATE End Market Headwinds More Challenging In 3Q/2H Creating a better tomorrow™… 12 ©2023 Regal Rexnord Corporation, Proprietary and Confidential
Slide 13: 2023 Outlook Update
3Q 2023 2023 OUTLOOK UPDATE • Revising 2023 Outlook For Adjusted EPS* Down To A Range Of $9.05 - $9.25 (M/P $9.15) Versus Prior Range Of $10.20 - $10.60 (M/P $10.40). ◦ Primary Drivers Are Weaker End Markets And Weaker Mix • Revenue For 2023 Now Expected To Be ~$6.25 Billion Versus Prior Expectation
Slide 14: 2023 4Q Segment Outlook
3Q 2023 2023 4Q SEGMENT OUTLOOK Expect Modest Sequential Improvement In 4Q Margins Creating a better tomorrow™… 14 ©2023 Regal Rexnord Corporation, Proprietary and Confidential
Slide 15: Questions & Answers
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 3Q 2023 Results, 2023 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 16: Closing Remarks
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 3Q 2023 Results, 2023 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 17: Adjusted Diluted Earnings Per Share
3Q 2023 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Nine Months Ended Sep 30, Sep 30, Sep 30, Sep 30, 2023 2022 2023 2022 GAAP (Loss) Earnings Per Share $ (2.10) $ 1.80 $ (1.71) $ 5.76 Intangible Amortization 0.99 0.51 2.53 1.56 (a) Restructuring and Related Costs 0.21 0.29 0.46
Slide 18: 2023 Adjusted Annual Guidance
3Q 2023 APPENDIX 2023 ADJUSTED ANNUAL GUIDANCE Minimum Maximum 2023 GAAP Diluted EPS Annual Guidance $ (1.07) $ (0.87) Intangible Amortization 3.55 3.55 (a) Restructuring and Related Costs 0.78 0.78 (b) Share-Based Compensation Expense 0.80 0.80 Inventory Step Up 0.60 0.60 Impairments and Exit Relat
Slide 19: 2023 Net Income to Adjusted EBITDA Annual Guidance
3Q 2023 APPENDIX 2023 NET INCOME TO ADJUSTED EBITDA ANNUAL GUIDANCE (Dollars in Millions) Minimum Maximum Net (Loss) Income $ (65.4) $ (50.0) Plus: Income Taxes 48.5 53.1 Plus: Interest Expense 430.5 430.5 Less: Interest Income (42.0) (42.0) Plus: Depreciation 170.0 170.0 Plus: Amortization 315.0 31
Slide 20: Adjusted EBITDA Three Months Ended
3Q 2023 APPENDIX Three Months Ended Industrial Powertrain Power Efficiency Automation & Industrial Total Regal ADJUSTED EBITDA Solutions Solutions Motion Control Systems Rexnord (Dollars in Millions) Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, 2023 2022 2023 2022
Slide 21: Adjusted EBITDA Nine Months Ended
3Q 2023 APPENDIX Nine Months Ended Industrial Powertrain Power Efficiency Automation & Industrial Total Regal ADJUSTED EBITDA Solutions Solutions Motion Control Systems Rexnord (Dollars in Millions) Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, 2023 2022 2023 2022 2
Slide 22: Net Income to Adjusted EBITDA
3Q 2023 APPENDIX NET INCOME TO ADJUSTED EBITDA (Dollars in Millions) Three Months Ended Nine Months Ended Sep 30, Sep 30, Sep 30, Sep 30, 2023 2022 2023 2022 Net (Loss) Income $ (138.6) $ 121.9 $ (110.9) $ 392.2 Plus: Income Taxes 12.7 33.2 34.9 110.0 Plus: Interest Expense 111.5 21.4 323.3 43.8 Les
Slide 23: Adjusted Net Sales
3Q 2023 APPENDIX ADJUSTED NET SALES (Dollars in Millions) Three Months Ended Industrial Powertrain Power Efficiency Automation & Total Regal Solutions Solutions Motion Control Industrial Systems Rexnord Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, 2023 2022 2023 20
Slide 24: Adjusted Effective Tax Rate
3Q 2023 APPENDIX ADJUSTED EFFECTIVE TAX RATE Three Months Ended Nine Months Ended Sep 30, 2023 Sep 30, 2022 Sep 30, 2023 Sep 30, 2022 (Loss) Income before Taxes $ (125.9) $ 155.1 $ (76.0) $ 502.2 Provision for Income Taxes 12.7 33.2 34.9 110.0 Effective Tax Rate (10.1)% 21.4 % (45.9)% 21.9 % (Loss)
Slide 25: Free Cash Flow
3Q 2023 APPENDIX FREE CASH FLOW Three Months Ended Nine Months Ended Sep 30, Sep 30, Sep 30, Sep 30, 2023 2022 2023 2022 Net Cash Provided by Operating Activities $ 186.7 $ 133.1 $ 514.0 $ 238.0 Payments for Certain Acquisition Costs (Net of Tax of $11.4 Million) (a) — — 86.9 — Adjusted Cash Flows f
Slide 26: Organic Sales Growth Three Months Ended
3Q 2023 APPENDIX ORGANIC SALES GROWTH Three Months Ended September 30, 2023 Industrial Power Automation Powertrain Efficiency & Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Sep 30, 2023 $ 640.7 $ 461.3 $ 419.8 $ 128.0 $ 1,649.8 Net Sales from
Slide 27: Organic Sales Growth Nine Months Ended
3Q 2023 APPENDIX ORGANIC SALES GROWTH Nine Months Ended September 30, 2023 Industrial Power Automation Powertrain Efficiency & Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Nine Months Ended Sep 30, 2023 $ 1,753.8 $ 1,390.9 $ 1,096.1 $ 401.7 $ 4,642.5 Net Sales
Slide 28: Debt to EBITDA
3Q 2023 APPENDIX DEBT TO EBITDA Last Twelve Months Sep 30, 2023 Proforma Net Loss (a) $ (98.6) Plus: Income Taxes 25.4 Plus: Interest Expense 484.2 Less: Interest Income (13.3) Plus: Depreciation 187.5 Plus: Amortization 348.0 Proforma EBITDA* $ 933.2 Plus: Restructuring and Related Costs (b) 60.5 P
Slide 29: Pro Forma Organic Sales Growth Three Months
3Q 2023 APPENDIX PRO FORMA ORGANIC SALES GROWTH (INCLUDING ALTRA) Three Months Ended September 30, 2023 Industrial Power Automation Powertrain Efficiency & Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Sep 30, 2023 $ 640.7 $ 461.3 $ 419.8 $ 12
Slide 30: Pro Forma Organic Sales Growth Nine Months
3Q 2023 APPENDIX PRO FORMA ORGANIC SALES GROWTH (INCLUDING ALTRA) Nine Months Ended September 30, 2023 Industrial Power Automation Powertrain Efficiency & Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Six Months Ended Sep 30, 2023 $ 1,753.8 $ 1,390.9 $ 1,096.1 $
Slide 31: Pro Forma Net Income to Adjusted EBITDA
3Q 2023 APPENDIX PRO FORMA NET INCOME TO ADJUSTED EBITDA Unaudited (Dollars in Millions) Three Months Ended Sep 30, 2022 Pro Forma Net Sales $ 1,791.6 Pro Forma Adjusted Net Sales $ 1,791.6 Pro Forma Net Income $ 71.6 Plus: Income Taxes 22.4 Plus: Interest Expense 106.6 Less: Interest Income (1.3) P
Slide 32: Pro Forma Adjusted EBITDA
3Q 2023 APPENDIX PRO FORMA ADJUSTED EBITDA Three Months Ended September 30, 2022 (Dollars in Millions) Industrial Power Powertrain Efficiency Automation & Industrial Total Regal Solutions Solutions Motion Control Systems Rexnord Pro Forma Net Sales $ 653.7 $ 569.1 $ 420.8 $ 148.0 $ 1,791.6 Pro Forma