Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Investor Presentation (March 2017)
30 slides from Regal Rexnord's investor presentation, March 2017
Slide 1: Regal Beloit Corporation Investor Relations Presentation
Regal Beloit Corporation Investor Relations Presentation March 2017 Mark Gliebe Chuck Hinrichs Chairman Vice President Chief Executive Officer Chief Financial Officer Jon Schlemmer Robert Cherry Chief Operating Officer Vice President Investor Relations ©2017 Regal Beloit Corporation
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 periodically disclose certain financial measures in our quarterly earnings releases, on investor conference calls, and in investor presentati
Slide 4: Regal is…
Regal is… A Leader in High Efficiency Motor & Power Transmission Systems − Well-positioned for global energy efficiency trend A Strong Free Cash Flow Generator − Five-year average free cash flow 138% of adjusted net income* Positioned to Drive Organic Growth through Innovation − Disruptive pro
Slide 5: Regal Overview
Regal Overview Sales by Product Sales by Segment Other Power Founded in 1955 with Couplings Transmission Climate Headquarters in Bearings Solutions Solutions Beloit, Wisconsin 23% 30% Gearing Fractional HP Motors Drives Generators 47% 2016 Sales of $3.2B Integral HP Motors Blowers Commercial & Indus
Slide 6: Segment End Markets, Products and Brands
Segment End Markets, Products and Brands Commercial & Industrial Systems Climate Solutions Power Transmission Solutions ® March 2017 ©2017 Regal Beloit Corporation 6
Slide 7: Financial Snapshot
Financial Snapshot Net Sales Adjusted Diluted EPS* (billions) $5.33 $3.5 $3.3 $3.2 $4.36 $4.44 $3.1 $4.31 2013 2014 2015 2016 2013 2014 2015 2016 Free Cash Flow* Dividends Per Share (millions) $374 $0.90 $0.94 $0.84 $0.78 $289 $224 $215 2013 2014 2015 2016 2013 2014 2015 2016 * Non-GAAP Financial Me
Slide 8: Consistently Generating Cash
Consistently Generating Cash (millions) $500 200% 175% $400 150% 125% $300 100% $200 75% 50% $100 25% $- 0% 2012 2013 2014 2015 2016 Free Cash Flow* % of Adj. Net Income* Free Cash Flow % of Adj. Net Income 5-Year Average of 138% * Non-GAAP Financial Measurement, See Appendix for Reconciliation Marc
Slide 9: Returning Cash to Shareholders
Returning Cash to Shareholders Dividends Per Share Paid $0.94 $0.90 $0.84 $0.78 $0.74 $0.70 $0.66 $0.64 $0.62 $0.58 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Consistent Increase in Cash Dividends to Shareholders March 2017 ©2017 Regal Beloit Corporation 9
Slide 10: Capital Allocation Priorities
Capital Allocation Priorities Balance Sheet Targets Debt/EBITDA* Ratio: 1.5 – 3.5 Capital Expenditures: 2.5% – 3.0% of Sales Cash Dividends: 20% – 24% Payout Ratio Acquisitions Share Repurchase Targeted Transactions to Strengthen the Opportunistically Repurchase Shares while Core and Drive Sha
Slide 11: Enterprise Strategy
Enterprise Strategy CORE CAPABILITIES FOUNDATIONAL PERFORMANCE Top Quartile Unique Culture Cash Generation KEY ELEMENTS Strong • Focus on Core Improving Operators • Innovate to Grow Margins • Simplification Innovative Customer Favored Drives Long Term Growth and Improved Returns March 2017 ©2017 Reg
Slide 12: Enterprise Strategy – Performance Targets
Enterprise Strategy – Performance Targets Organic Sales Adj. Operating ROIC* Free Cash Flow Growth* Margins* to Net Income* 2% – 4% CAGR 200 – 250 bps 300 – 400 bps 100% – 125% By 2019 Enterprise Strategy Drives Sustainable Improvements in Financial Performance * Non-GAAP Financial Measurement, See
Slide 13: Focus on the Core
Focus on the Core Acquisition First Organic First to Serial Acquirer Targeted Acquisitions Focus On Core Businesses Where We Can Differentiate with Technology Increase the Focus on the Distribution Channel to Drive Growth Selectively Prune Businesses Where We Do Not Have a Clear Advant
Slide 14: Innovate to Grow
Innovate to Grow Disruptive Energy Efficiency Internet of Things Technology Commercial Refrigeration HP Range Year Markets Efficient motors use electronics Effective March of 2017 < 1.0 2011 Furnaces Every motor can be a sensor Requires ECM type motor Boilers Every motor can communicate Ap
Slide 15: Energy Efficiency Requirements Increasing
Energy Efficiency Requirements Increasing Comm. Ref. Commercial Fan Energy Equipment HVAC Rating (FER) 2017 2018 2019 2020 IE3 Efficiency Walk in Coolers Industrial Motors & Freezers Multi-Year Trend Favors High Efficiency Suppliers March 2017 ©2017 Regal Beloit Corporation 15
Slide 16: Full Range of FER Solutions
Full Range of FER Solutions DEC Star® Highest Efficiency Customer Benefits Solution Full Range of Solutions Highest Motor Efficiency ECM 3.0+ with Proven Reliability High Efficiency Motor Premium Solution for Most Difficult Applications Ensite™ ECM Motor Regal Benefits Full Customer Engageme
Slide 17: Disruptive Technology – DEC Star
Disruptive Technology – DEC Star® Standard DEC Star® Innovative Benefits to Customers First to Market Substantial Improvement in New Technology in the Motor, Energy Efficiency Drive, Blower Construction and Less Noise Blower Wheel Less Weight 17 Patents Issued and Pending Uniform Airfl
Slide 18: Scaling Axial Technology
Scaling Axial Technology Axial Axial DEC Star® UlteMAX™ Draft Inducer Gas Pre-Mix HVAC Solution Motor & Control 2011 2013 2015 2017 Growth Opportunities in Both Existing and New Markets for Regal March 2017 ©2017 Regal Beloit Corporation 18
Slide 19: Disruptive Technology – UlteMAX
Disruptive Technology – UlteMAX™ Customer Benefits Standard UlteMAX™ Industrial Motor Motor & Control Compact Form Factor 50% – 75% Lower Weight Higher Efficiency Regal Benefits Significant Customer Interest Sales Begin in 2017 Est. $70 Million Incremental Sales by 2023 Differentiated Fo
Slide 20: UlteMAX – Industrial Applications
UlteMAX™ – Industrial Applications Standard Air Handling Axial Air Handling Innovative Benefits to Customers First to Market Substantial Improvement in Revolutionary Form Factor Energy Efficiency New Technology in the Motor, Drive 50% - 75% Less Weight and Size 8 Patents Issued and Pendi
Slide 21: Simplification
Simplification Completed thru 2016 Planned for 2017-2019 75% of Sales on One ERP ERPs 90% of Sales on One ERP 1,845,000 sq ft Reduced Another 1,100,000 sq ft 15% Reduction Manufacturing Footprint Cumulative 25% Reduction 4 Major Design Platforms 1 Additional Design Platform Consolidated Design Platf
Slide 22: Leveraging Simplification
Leveraging Simplification Rooftop Consolidation Automation 1,845K Enables sq ft consolidated ERP Consolidation Digital Customer Experience 75% Enables revenue on one system Platform Consolidation Innovation Energy Efficiency 4 Enables Disruptive Technology Internet of Things design platforms e
Slide 23: Key Takeaways
Key Takeaways Regal is… A Leader in High Efficiency Motor & Power Transmission Systems A Strong Free Cash Flow Generator Positioned to Drive Organic Growth through Innovation Delivering Results from Ongoing Simplification Initiative March 2017 ©2017 Regal Beloit Corporation 23
Slide 24: Thank You
Thank You Mark Gliebe Chuck Hinrichs Chairman Vice President Chief Executive Officer Chief Financial Officer Jon Schlemmer Robert Cherry Chief Operating Officer Vice President Investor Relations ©2017 Regal Beloit Corporation
Slide 25: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations (Dollars in Millions) Twelve Months Ended FREE CASH FLOW Dec 29, 2012 Dec 28, 2013 Jan 3, 2015 Jan 2, 2016 Dec 31, 2016 Net Cash Provided by Operating Activities $ 351.7 $ 305.0 $ 298.2 $ 381.1 $ 439.6 Additions to Property Plant and Equipment (91.0) (82.7) (83.6) (
Slide 26: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE Twelve Months Ended Dec 31, Jan 2, 2016 2016 GAAP Diluted Earnings (Loss) Per Share $ 4.52 $ 3.18 Goodwill Impairment - 1.29 Venezuelan Asset Write Down - 0.28 Restructuring and Related Costs 0.10 0.13 Gain on Sale of Assets (0.04
Slide 27: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations EBIT AND EBITDA RECONCILIATION (Dollars In Millions) Fiscal 2016 Income From Operations $ 320.6 Plus: Goodwill Impairment - Plus: Asset Impairment and Other Net, - Plus: Restructuring and Related Costs 6.8 Plus: Purchase Accounting and Transaction Costs - Plus: Vene
Slide 28: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ORGANIC GROWTH (Dollars in Millions) Fiscal 2016 Net Sales $ 3,224.5 Net Sales from Businesses Acquired (35.9) Net Sales from Businesses Divested 11.6 Impact from Foreign Currency Exchange Rates 31.2 Adjusted Net Sales $ 3,231.4 Net Sales Ended Jan 2, 2016 $ 3,509.7
Slide 29: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations RETURN ON INVESTED CAPITAL (ROIC) RECONCILIATION (Data in Millions) Fiscal 2015 Fiscal 2016 Cash $ (253) $ (285) Current Maturities of Long Term Debt 6 101 Long Term Debt 1,716 1,311 Total Net Debt $ 1,469 $ 1,127 Total Regal Beloit Corporation Shareholders' Equity
Slide 30: Appendix Regal Shipping Days
Appendix Regal Shipping Days 1Q 2Q 3Q 4Q FY 2014 63 63 63 64 253 2015 64 63 64 59 250 2016 64 64 63 60 251 2017 64 63 63 60 250 Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31 Fiscal Years 2015, 2016 and 2017 have 52 weeks Fiscal Year 2014 had 53 weeks