Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Merger or Acquisition (December 2014)
20 slides from Regal Rexnord's merger presentation, Dec 15, 2014
Slide 1: Acquisition of Power Transmission Solutions Business of Emerson Electric Co.
Acquisition of Power Transmission Solutions Business of Emerson Electric Co. December 15, 2014 Posted Dec 15, 2014 8:00AM CST
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. The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: With the exception of historical facts, the state
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). In this presentation, we adjusted diluted earnings per share (EPS), adjusted EBITDA, and free cash flow and free cash flow (collectively, “non-GAAP fin
Slide 4: Agenda
Agenda Transaction Overview Power Transmission Solutions (PTS) Overview Financial Summary Closing Comments Q&A p4
Slide 5: Transaction Overview
Transaction Overview > Acquiring Emerson’s Power Transmission Solutions (PTS) Business > A Premier PT Business with ~$600 Million in Revenue > $1.4 Billion of Cash and $40 Million of Assumed Liabilities > Accretive to EPS and Margins in 2015 and Beyond > Expect $30 Million Of Annual Synergies Within
Slide 6: Strategic Rationale
Strategic Rationale Meets Strategic > Technology Acquisition > Expands Global Presence Objectives > Margin Improvement > Diversifies our End Market Exposure Diversifies Regal > Over Two-Thirds of PTS Revenue Sold Through Distribution > Balances Regal’s Portfolio > Complete Line of Power Transmission
Slide 7: PTS Overview
PTS Overview Global Brands Revenue by Product Gearing 9% Components Bearings 12% 44% Conveying Systems ® 16% Couplings 19% Foundation for New Regal Growth Platform p7
Slide 8: PTS Overview
PTS Overview Category Key End Markets Est. Installed Base1 Key Products Bulk handling Aero (fixed/rotary) $1,740M CHVAC (fans/blowers) (48% of total) BEARINGS General industrial Cam Follower Mounted Bearing Turbo (energy) Metals (rolling mills) $1,000M Wind (turbines) (27% of total) CO
Slide 9: PTS Overview
PTS Overview Revenue by End Market Revenue by Geography Latin Asia America General Material Pacific 6% Industrial Handling 6% 25% 22% EMEA 18% Wind & Marine Metals 3% 14% Aerospace 7% Comm North Energy America HVAC Beverage 11% 70% 8% 10% Diversifies End Market Exposure and Broadens Geographic Reach
Slide 10: Financial Summary
Financial Summary > $1.4 Billion of Cash and $40 Million of Assumed Liabilities – FY 2014* Adj. EBITDA Multiple of 11.7 x Purchase Price 10.4 x, with 338(h)(10) Tax Benefit 8.7 x with Tax Benefit and Synergies – FY 2014* Adj. EBIT Multiple of 12 x with Tax Benefit > Accretive to EPS and Margins
Slide 11: Financial Summary
Financial Summary > $1.25 Billion from New Unsecured Term Loan Funding > $150 Million from Cash and Revolving Credit Facility > Closing Pro Forma Credit Metrics Credit Metrics – Debt to LTM Adj. EBITDA 3.6 x – Debt to Total Capital 48% > Pro Forma First Year Free Cash Flow* of ~$300 Million Free Cas
Slide 12: Total Debt / Total Capital
Financial Summary 60% Power Transmission 50% Total Debt / Total Capital 40% 30% 20% 10% PF Debt / Cap at 48% PF Debt / LTM Adj. EBITDA at 3.6 x 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Record of Strong Free Cash Flow to Reduce Debt p 12
Slide 13: Pro Forma Segment Reporting
Pro Forma Segment Reporting Regal Beloit – Revenue by Segment Combined Company Revenue LTM* Revenue: Mechanical Pro Forma Combined Revenue: ~$3.8 Billion $3.2 Billion Power Transmission Electrical Solutions 23% C&I Systems PTS – Revenue by Segment 48% Climate FY 2014** Revenue: $0.6 Billion Solution
Slide 14: Financial Summary
Financial Summary LTM Revenue LTM Adj. EBITDA Margin % ~ $3,808 ($ in Millions) ~ 20.3% $3,208 ~14.3% 13.2% ~$600 Regal* PTS** Regal PF Regal* PTS** Regal PF _____________________ Note: *LTM as of September 27, 2014. **FY 2014 ending September 30, 2014. p 14
Slide 15: Synergies
Synergies Synergy Opportunity > Manufacturing Optimization Cost Synergies > Material Sourcing > Logistics Tax Synergies > $5 Million of Annual Tax Synergies > Cross Selling Opportunities Revenue Synergies > Expanded Geographic Reach > Broader Product Line Enables Systems/ Services Selling p 15
Slide 16: Closing Comments
Closing Comments > Transformational Acquisition of PTS Strengthens Regal’s Existing Power Transmission Business and Balances Portfolio > Consistent with Our Business and Acquisition Strategy > Enhances Scale of PT Platform and Offers Greater Growth Opportunities > Broader Product Offering Enables En
Slide 17: Questions and Answers
REGAL Questions and Answers p17
Slide 18: Thank You
Thank You Mark J Gliebe President Chief Executive Officer Jonathan Schlemmer Chief Operating Officer Chuck Hinrichs Vice President Chief Financial Officer John Perino Vice President Investor Relations
Slide 19: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations EBITDA Reconciliation Dollars in Millions 4Q 2013 1Q 2014 2Q 2014 3Q 2014 LTM Net Income ($33.2) $43.8 $56.2 $47.5 $114.3 Asset Impairment and Other, Net 81.0 - 1.0 - 82.0 Plus: Minority Interest 0.4 1.2 1.9 1.3 4.8 Plus: Taxes -3.7 16.0 21.0 18.1 51.4 Plus: Interes
Slide 20: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Free Cash Flow Reconciliation (Dollars in Millions) 2007 2008 2009 2010 2011 2012 2013 2014E* Cash Flow from Operation $ 200.6 $ 154.2 $ 314.9 $ 175.4 $ 265.3 $ 351.7 $ 305.0 $ 291.0 Capital Expenditures (36.6) (52.2) (33.6) (45.0) (57.6) (91.0) (82.7) (80.0) Grants