Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Merger or Acquisition (October 2022)
21 slides from Regal Rexnord's merger presentation, Oct 27, 2022
Slide 1: Regal Rexnord's Acquisition of Altra Industrial Motion
REGAL REXNORD’S ACQUISITION OF ALTRA INDUSTRIAL MOTION October 27th, 2022
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation 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, pro
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 of America (“GAAP”). We also periodically disclose certain financial measures in our quarterly earnings releases, on investor conference calls, and in investor
Slide 4: Today's Presenters
TODAY’S PRESENTERS LOUIS PINKHAM ROB REHARD Chief Executive Officer Chief Financial Officer 44
Slide 5: Continuing Regal Rexnord's Transformation Journey
CONTINUING REGAL REXNORD’S TRANSFORMATION JOURNEY Global player in energy efficient Motion control and automation electronic motors, air handling sub- technology innovator with leading systems, and motion control solutions positions in secular growth markets Creates Meaningful Automation Player, $16
Slide 6: Expect Compelling Value Creation for Our Shareholders
EXPECT COMPELLING VALUE CREATION FOR OUR SHAREHOLDERS + Attractive Financial Impact 2022E* 2025E* ✓ ✓ ~40% ~500bp ~$7.2B ~$8.3B Combined 2025E adj. gross margin EBITDA margin expansion opportunity Revenue Revenue Accretive in ✓ >35% ✓ first year Secular growth exposure to Adj. EPS, with double digit
Slide 7: Regal Rexnord Has a Strong Track Record of Execution and Outperformance
REGAL REXNORD HAS A STRONG TRACK RECORD OF EXECUTION AND OUTPERFORMANCE Outperforming on total shareholder returns… …exceeded FY20 Investor Day targets… RRX S&P 400 Industrials S&P 500 Organic Revenue Adj. Operating Adj. FCF ROIC Capital CAGR Margin EPS CAGR Conversion Improvement Deployment Target
Slide 8: Highly Strategic Transaction with Expected Compelling Value Creation
HIGHLY STRATEGIC TRANSACTION WITH EXPECTED COMPELLING VALUE CREATION ✓ Transforms global automation solutions capabilities and enhances industrial powertrain portfolio ✓ Accelerates digital and IIoT strategy ✓ Strong shared culture of focus on serving customers and driving efficiency ✓ Meaningfully
Slide 9: Transaction Overview
TRANSACTION OVERVIEW • Regal Rexnord to acquire 100% of Altra for $62.00 / share, implying ~$4.09B equity value and $4.95B firm value1 Consideration • Represents 13.6x 9/30/22 LTM Adj. EBITDA multiple, 9.5x including estimated run-rate cost and Valuation synergies2 • 100% cash consideration, finance
Slide 10: Altra's Automation and Specialty Segment Unlocks New High Growth Focus Areas
ALTRA’S AUTOMATION AND SPECIALTY SEGMENT UNLOCKS NEW HIGH GROWTH FOCUS AREAS FOR REGAL REXNORD Regal Rexnord Altra Automatic Automated Mat Top Bulk Sanitary/ Paralleling Medical Factory Medical Surgical Infusion Transfer Guided Conveyors Palletizers Washdown Switchgear Devices Automation Patient Tab
Slide 11: Enhances Industrial Powertrain Offering
ENHANCES INDUSTRIAL POWERTRAIN OFFERING Motors Digital Solutions Gear Coupling Belts Belted Drives Disc Coupling Mounted Bearings Gear Motor Shaft Lock Mounted Bearings Clutch Gear Drives Brakes Addition Of Altra’s Complementary Power Transmission Portfolio Expected To Create A More Compelling Offer
Slide 12: A Stronger Portfolio for the Future
A STRONGER PORTFOLIO FOR THE FUTURE Segments End-Markets Geography Altra Revenue Mix Industrial Systems Res NC Regal Rexnord + 9% 3% Other (including General Industries APAC and RoW Automation & Medical, 19% 16% Specialty Renewables, 13% Motion Control Data Center) Solutions 25% 48% Consumer Europe
Slide 13: Compelling Synergy Potential
COMPELLING SYNERGY POTENTIAL Significant Cost Synergies ($M)1 Material Cross-Marketing Opportunities ~$160 Opportunity to create new sub-systems ~$140 including the industrial powertrain ~$100 Geographic expansion, access to new markets and customers ~$40 Shared distribution channels Deployment of c
Slide 14: Enhanced Free Cash Flow Generation Expedites Deleveraging
ENHANCED FREE CASH FLOW GENERATION EXPEDITES DELEVERAGING Pro Forma Free Cash Flow Pro Forma Net Leverage ~$1.1B ~3.9x1 2.5x – ~$650M 3.0x 2.0x – 2.5x 2022E 2025E At Close Expected in Long-term (Expected) 2024 Target Expected FCF Conversion ~100% And Targeted Leverage Of 2.5x To 3.0x In 2024 Note: N
Slide 15: Aligned with Regal Rexnord's M&A Criteria
ALIGNED WITH REGAL REXNORD’S M&A CRITERIA ✓ Secular/GDP+ growth exposure ✓ Limited tech disruption ✓ ✓ Deal runway Market ✓ Path to gross margins >35% ✓ Trusted brands ✓ Target ✓ Technology leadership ✓ Fit with Regal Rexnord’s culture Fit ✓ Builds upon Regal Rexnord’s strengths ✓ ✓ Complementary to
Slide 16: Proven Approach to Integration
PROVEN APPROACH TO INTEGRATION Dedicated Process And Tools Reporting Cadence Integration Team • Reporting into CEO • Detailed software- • Reporting tied into enabled tracking tools financial systems • Fully dedicated team • Proven processes for • Monthly Review with • Broad functional synergy captur
Slide 17: Expected Regal Rexnord in 2025
EXPECTED REGAL REXNORD IN 2025 Adjusted Adjusted Annual Free Secular End Revenue Adjusted EPS Gross Margin EBITDA Margin1 Cash Flow Market Exposure Shared At Investor >$6B ~37% ~25% ~$15 ~$1B >35% Day 2022 Current 2025E ~$18 >40% Expected ~$8.3B ~40% >25% ~$1.1B Updating Target Metrics From Investor
Slide 18: Highly Strategic Transaction with Expected Compelling Value Creation
HIGHLY STRATEGIC TRANSACTION WITH EXPECTED COMPELLING VALUE CREATION ✓ Transforms global automation solutions capabilities and enhances industrial powertrain portfolio ✓ Accelerates digital and IIoT strategy ✓ Strong shared culture of focus on serving customers and driving efficiency ✓ Meaningfully
Slide 19: Appendix
APPENDIX 19
Slide 20: Altra Snapshot
ALTRA SNAPSHOT ~$1.9B ~19.5% ~$0.95B ~9,600 49 Net Sales Adj. EBITDA Margin Backlog Employees Manufacturing Sites LTM Sep 30, 20221 LTM Sep 30, 20221 June 30, 2022 Dec 31, 2021 Dec 31, 2021 Factory Automation and Specialty Machinery 9 15 Turf and Garden, Ag, Construction 15 2 Material Handling 7 Med
Slide 21: Segment Snapshots
SEGMENT SNAPSHOTS Power Transmission Technologies Automation & Specialty Renewables Tidal turbine Medical Factory Automation Devices Gear drives and gear Precision motors and motors automation Automated Guided Medical Vehicles Patient Tables Turf & Ag Robotic arms Engineered couplings and universal