Zurn Elkay Water Solutions Corporation · NYSE:ZWS
Zurn Elkay Water Solutions — Rexnord — Q3 FY2019 Earnings Presentation
17 slides from Zurn Elkay Water Solutions's earnings presentation, Jan 31, 2019
Slide 1: Third Quarter Fiscal Year 2019 Financial Results
THIRD QUARTER FISCAL YEAR 2019 FINANCIAL RESULTS January 31, 2019
Slide 2: Cautionary Statement Under the Private Securities Litigation Reform Act
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT This presentation and discussion contains certain forward-looking statements that are subject to the Safe Harbor and Cautionary language contained in the press release we issued on January 30, 2019, as well as other factors that
Slide 3: Strategic Update
STRATEGIC UPDATE Consolidated Rexnord • 3Q net sales increase +11% year over year, core sales(1) growth +6% • Adjusted EBITDA(1) increases 11% year over year to $103 million • SCOFR II on track to deliver $15 million annualized structural cost savings Process & Motion Control • 3Q net sales increase
Slide 4: Strategic Positioning
STRATEGIC POSITIONING Supply Chain Free Cash Flow Optimization Expansion & & Footprint Leverage Reduction Repositioning Through-Cycle Tariff Mitigation Financial & Performance Margin Expansion 4
Slide 5: Financial Update
FINANCIAL UPDATE Third Quarter Fiscal Year 2019 • Adjusted EBITDA(1) of $103 million increased 11% year over year • Net sales increased 11% year over year • Centa acquisition increased sales by 7% • Foreign currency translation decreased sales by (2%) • Core sales(1) increased 6% year over year • Ea
Slide 6: Fiscal Year 2019 Outlook
FISCAL YEAR 2019 OUTLOOK Fiscal Year 2019 Outlook • Core sales growth(1) in mid-single-digit percentage range(2) • Adjusted EBITDA(1) in $437 - $443 million range(2) • Free cash flow(1) to exceed net income(2) • Outlook continues to reflect Continuing Operations only (1) Non-GAAP measure defined, re
Slide 7: 3Q FY19 Summary
3Q FY19 SUMMARY 3Q FY19 3Q FY18 Change Net Sales (1) $485 $437 11% Growth from: Core 6% Acquisitions 7% Translation (2%) Adjusted EBITDA (1, 2) $103 $93 11% % of Sales 21.3% 21.3% - (1) 3Q FY19 and 3Q FY18 results reflect reclassification of VAG as Discontinued Operations as a result of the sale dur
Slide 8: Process & Motion Control
PROCESS & MOTION CONTROL 3Q FY19 3Q FY18 Change End-Market Outlook Assumed in Guidance Net Sales $327 $293 12% Industrial Distribution Growth from: US & Canada Core 4% Europe Acquisitions 10% Rest of World Translation (2%) Food & Beverage: Global Commercial Aerospace: Global Adjusted EBITDA (1) $73
Slide 9: Water Management
WATER MANAGEMENT 3Q FY19 3Q FY18 Change (1) End-Market Outlook Assumed in Guidance End-Market Outlook Assumed in Guidance Net Sales $158 $144 10% Industrial Distribution US & Canada Europe Rest of World Food & Beverage: Global Commercial Aerospace: Global Process Industries: Global Growth from: Nonr
Slide 10: Cash Flow & Balance Sheet
CASH FLOW & BALANCE SHEET Net Debt Leverage Ratio (1) Free Cash Flow ($ millions) (2) 4.0x 250 3.8x 3.7x 200 3.5x 150 3.1x 3.0x 100 197 2.7x 188 167 2.5x 2.5x 141 119 50 97 2.3x 2.0x 0 Mar-15 Mar-16 Mar-17 Mar-18 30-Sep-18 31-Dec-18 FY15 FY16 FY17 FY18 9 Mos FY18 9 Mos FY19 Total Debt ($ millions) (
Slide 11: Appendix
APPENDIX
Slide 12: Fiscal Year 2019 Outlook
FISCAL YEAR 2019 OUTLOOK Core sales % growth(1) + Mid Single Digit Adjusted EBITDA(1) $437 - $443 million Free Cash Flow(1) > Net Income Depreciation & Amortization(2) ~ $ 85 million Interest Expense ~ $ 71 million Effective Tax Rate(3) 25% - 26% Capital Expenditures ~ 2.2% of sales (1) Non-GAAP mea
Slide 13: If-Converted Incremental Shares
IF-CONVERTED INCREMENTAL SHARES Use If-Converted Method to calculate diluted EPS, Only If Dilutive 1) Do not deduct preferred dividend from net income 2) Add indicated incremental shares to diluted share count Incremental Shares Average Common from Conversion Stock Price (millions) < $ 20.99 19.18 $
Slide 14: Calculating 3Q FY19 Diluted Adjusted EPS
CALCULATING 3Q FY19 DILUTED ADJUSTED EPS Third Quarter Ended ($ mi l l i ons , except per-s ha re a mounts ) 12/31/2018 Base Methodology Adjusted Net Income (1) $ 51.6 Weighted-Average Number of Shares: Diluted (thousands) 107,066 (1) Adjusted Earnings Per Share: Diluted (Base Method) $ 0.48 If-Conv
Slide 15: 3Q FY19 Non-GAAP Adjustments After Tax
3Q FY19 NON-GAAP ADJUSTMENTS AFTER TAX Income Impact on Pretax Tax Adjusted Adjustment Type ($ millions) Adjustment Provision (3) Net Income (4) Dividends on preferred stock $ 5.8 $ - $ 5.8 Non-controlling interest loss (0.3) - (0.3) Loss from discontinued operations, net of tax 27.8 - 27.8 Equity m
Slide 16: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA (S mi l l i ons ) Third Quarter Ended (1) Adjusted EBITDA December 31, 2018 December 31, 2017 Net income attributable to Rexnord common stockholders $ 19.6 $ 75.8 Dividends on preferred stock 5.8 5.8 Non-controlling interest loss (0.3) - Loss from discontinued opera
Slide 17: Reconciliation of Adjusted Net Income
RECONCILIATION OF ADJUSTED NET INCOME (S mi l l i ons ) Third Quarter Ended Adjusted Net Income and Earnings Per Share December 31, 2018 December 31, 2017 Net income attributable to Rexnord common stockholders $ 19.6 $ 75.8 Dividends on preferred stock 5.8 5.8 Non-controlling interest loss (0.3) - L