Slide 1: First Quarter 2021 Earnings Conference Call
1Q May 4, 2021 First Quarter 2021 Earnings CONFERENCE CALL Louis Pinkham Rob Rehard Chief Executive Officer Vice President Chief Financial Officer
Slide 2: Cautionary Statement
1Q 2021 CAUTIONARY STATEMENT Forward Looking Statements Certain statements made in this release are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. This release contains forward- looking statemen
Slide 3: Non-GAAP Financial Measures
1Q 2021 NON-GAAP FINANCIAL MEASURES We prepare financial statements in accordance with accounting principles generally accepted percentage of adjusted net income attributable to Regal Beloit Corporation, adjusted income in the United States of America (“GAAP”). We also periodically disclose certain
Slide 4: Agenda
1Q 2021 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 1Q 2021 Results & 2Q 2021 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2021 Regal Beloit Corporation 4
Slide 5: CEO Commentary and Overview
1Q 2021 CEO COMMENTARY AND OVERVIEW • Sales Up 9.1% on an Organic Basis ($ in millions, except per share data) 1Q 2020 1Q 2021 • Short Cycle Industrial Recovery Gaining Momentum • 80/20 Pruning Initiatives Reduced Sales by ~200bps Adjusted Net Sales* $734.2 $814.1 • Adjusted Operating Margin Up 310b
Slide 6: Case Study – PTS Hub City HERA Gear Drives
1Q 2021 CASE STUDY – PTS HUB CITY HERA GEAR DRIVES Regal domain expertise and superior technologies are helping customers improve operational efficiency – reducing downtime, lowering energy costs, and limiting waste streams. Customer Problem A large distribution warehouse had oil leaks on its convey
Slide 7: Agenda
1Q 2021 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 1Q 2021 Results & 2Q 2021 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2021 Regal Beloit Corporation 7
Slide 8: Commercial Systems
1Q 2021 COMMERCIAL SYSTEMS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Up 15.9% ($ Millions) from Operations* ($ Millions) • Key Drivers + China/Asia-Pacific + C-HVAC Globally $237.0 + Pool Pump ‒ 80/20 Account Pruning (~1.6%) $199.4 Adjusted Operating Margin* • 11.7% of Adj. Net Sale
Slide 9: Industrial Systems
1Q 2021 INDUSTRIAL SYSTEMS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Up 1.5% ($ Millions) from Operations* ($ Millions) • Key Drivers + China + India + Data Centers – General Industrial (N.A., MENA) – 80/20 Account Pruning (~1.8%) $136.4 $129.6 Adjusted Operating Margin* • 3.0% of A
Slide 10: Climate Solutions
1Q 2021 CLIMATE SOLUTIONS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Up 14.0% ($ Millions) from Operations* ($ Millions) • Key Drivers + N.A. HVAC $239.1 + EMEA + G.I. $210.1 $43.6 + Commercial Refrigeration – 80/20 Pruning (~3.0%) $32.0 Adjusted Operating Margin* • 18.2% of Adj. Net
Slide 11: Power Transmission Solutions
1Q 2021 POWER TRANSMISSION SOLUTIONS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Up 1.8% ($ Millions) from Operations* ($ Millions) • Key Drivers + Aero (Project Win) + Unit Handling (Modsort Gains) + China $195.1 $201.6 – Solar YOY Project Timing $37.7 – O&G $30.7 Adjusted Operating
Slide 12: Key Financial Metrics
1Q 2021 KEY FINANCIAL METRICS Capital Expenditures Balance Sheet as April 3, 2021 • $10.7 Million in 1Q 2021 • Total Debt of $1,017.7 Million • $57.0 Million Expected in FY 2021** • Net Debt of $451.3 Million • Net Debt/Adj. EBITDA* of 0.9 Effective Tax Rate (ETR) • 23.2% Adj. ETR* in 1Q 2021 • 21.0
Slide 13: 2Q 2021 Outlook
1Q 2021 2Q 2021 OUTLOOK Introducing 2Q 2021 Guidance* • Adjusted Diluted Earnings per Share** in a Range of $1.85 to $2.05 for 2Q, Up Over 100% YOY at the Mid-Point Other FY 2021 Modeling Assumptions • Net Interest Expense of ~$28 Million*** • Capital Expenditures of ~$57 Million • Depreciation & Am
Slide 14: Agenda
1Q 2021 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 1Q 2021 Results & 2Q 2021 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2021 Regal Beloit Corporation 14
Slide 15: Appendix
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Slide 16: Adjusted Diluted Earnings Per Share
1Q 2021 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Apr 3, Mar 30, 2021 2020 GAAP Diluted Earnings Per Share $ 1.60 $ 1.12 Restructuring and Related Costs 0.03 0.10 Transaction Costs 0.36 — Loss on Businesses Divested and Assets to be Exited — 0.03 Gain on Sales of Assets (0.01)
Slide 17: 2021 Adjusted Second Quarter Guidance
1Q 2021 APPENDIX 2021 ADJUSTED SECOND QUARTER GUIDANCE Minimum Maximum 2021 Diluted EPS Second Quarter Guidance $ 1.50 $ 1.70 Transaction and Related Costs 0.24 0.24 Restructuring and Related Costs 0.11 0.11 2021 Adjusted Diluted EPS Second Quarter Guidance $ 1.85 $ 2.05 ©2021 Regal Beloit Corporati
Slide 18: Adjusted Income from Operations
1Q 2021 APPENDIX Three Months Ended Power Commercial Transmission ADJUSTED INCOME FROM OPERATIONS Systems Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Apr 3, Mar 28, Apr 3, Mar 28, Apr 3, Mar 28, Apr 3, Mar 28, Apr 3, Mar 28, 2021 2020 2021 2020 2021 2020 2021 202
Slide 19: Adjusted Net Sales
1Q 2021 APPENDIX Three Months Ended Commercial Power Transmission ADJUSTED NET SALES Systems Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Apr 3, Mar 28, Apr 3, Mar 28, Apr 3, Mar 28, Apr 3, Mar 28, Apr 3, Mar 28, 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 N
Slide 20: Adjusted Effective Tax Rate
1Q 2021 APPENDIX ADJUSTED EFFECTIVE TAX RATE Three Months Ended (Dollars in Millions) Apr 3, Mar 28, 2021 2020 Income before Taxes $ 87.2 $ 60.6 Provision for Income Taxes 20.2 13.9 Effective Tax Rate 23.2% 22.9% Income before Taxes $ 87.2 $ 60.6 Loss on Businesses Divested and Assets to be Exited -
Slide 21: Free Cash Flow
1Q 2021 APPENDIX Three Months FREE CASH FLOW Ended (Dollars in Millions) Apr 3, Mar 28, 2021 2020 Net Cash Provided by Operating Activities $ 49.5 $ 102.7 Additions to Property Plant and Equipment (10.7) (10.9) Free Cash Flow $ 38.8 $ 91.8 GAAP Net Income Attributable to Regal Beloit Corporation $ 6
Slide 22: Organic Sales Growth
1Q 2021 APPENDIX ORGANIC SALES GROWTH Three Months Ended (Dollars in Millions) Power Commercial Industrial Climate Transmission Systems Systems Solutions Solutions Total Regal Net Sales Three Months Ended Apr 3, 2021 $ 237.0 $ 136.4 $ 239.1 $ 201.6 $ 814.1 Impact from Foreign Currency Exchange Rates
Slide 23: Operating Leverage-Total Regal
1Q 2021 APPENDIX OPERATING LEVERAGE-TOTAL REGAL Three Months Ended (Dollars in Millions) Apr 3, Mar 28, 2021 2020 Change GAAP Income from Operations $ 97.1 $ 70.0 $ 27.1 Adjusted Income from Operations $ 113.1 $ 79.2 $ 33.9 Net Sales $ 814.1 $ 734.2 $ 79.9 Adjusted Net Sales $ 814.1 $ 734.2 $ 79.9 G
Slide 24: Total Gross Debt/EBITDA
1Q 2021 APPENDIX TOTAL GROSS DEBT/EBITDA TOTAL GROSS DEBT/ADJUSTED EBITDA (Dollars in Millions) (Dollars in Millions) LTM Apr 3, LTM Apr 3, 2021 2021 Net Income $ 214.1 Net Income $ 214.1 Plus: Income Taxes 63.1 Plus: Income Taxes 63.1 Plus: Interest Expense 40.8 Plus: Interest Expense 40.8 Less: In
Slide 25: Total Net Debt/EBITDA
1Q 2021 APPENDIX TOTAL NET DEBT/EBITDA TOTAL NET DEBT/ADJUSTED EBITDA (Dollars in Millions) (Dollars in Millions) LTM Apr 3, LTM Apr 3, 2021 2021 Net Income $ 214.1 Net Income $ 214.1 Plus: Income Taxes 63.1 Plus: Income Taxes 63.1 Plus: Interest Expense 40.8 Plus: Interest Expense 40.8 Less: Intere
Slide 26: Reconciliation for LIFO Adjustment
1Q 2021 APPENDIX Quarter-to-Date Year-to-Date RECONCILIATION FOR LIFO ADJUSTMENT Commercial Systems Industrial Systems Commercial Systems Industrial Systems (Dollars in Millions) Three Months Ended March 28, 2020 Three Months Ended March 28, 2020 GAAP Income from Operations - Recasted 12.1 (0.1) 12.
Slide 27: Shipping Days
1Q 2021 APPENDIX Shipping 1Q 2Q 3Q 4Q FY Days 2015 64 63 64 59 250 2016 64 64 63 60 251 2017 64 63 63 60 250 2018 63 64 63 61 251 2019 63 63 63 61 250 2020 63 63 63 64 253 2021 64 64 63 60 251 Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31 Fiscal Years 2