Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Q2 2023 Earnings Presentation
31 slides from Regal Rexnord's earnings presentation, Aug 1, 2023
Slide 1: Second Quarter 2023 Earnings
Creating a better tomorrow™… Second Quarter 2023 Earnings August 1, 2023 Louis Pinkham, Chief Executive Officer Rob Rehard, Executive Vice President, Chief Financial Officer
Slide 2: 2Q 2023 Forward Looking Statements
2Q 2023 FORWARD LOOKING STATEMENTS This release 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,
Slide 3: 2Q 2023 Non-GAAP Financial Measures
2Q 2023 NON-GAAP FINANCIAL MEASURES We prepare financial statements in accordance with accounting principles generally In addition to these non-GAAP measures, we use the term “organic sales growth” to refer to accepted in the United States of America (“GAAP”). We also periodically disclose certain t
Slide 4: Opening Comments & Overview; 2Q 2023 Results, 2023 Outlook
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 2Q 2023 Results, 2023 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 5: Opening Comments & Overview
2Q 2023 OPENING COMMENTS & OVERVIEW • Second Quarter - Our First With Altra - Marks A Significant Milestone On Regal Rexnord's Transformation Journey • Strong 2Q Results Above Our Sales & Adj. EBITDA Targets 21.0% 21.5% • Sales Up 31.1% Y/Y, Down 5.7% On A Pro Forma Organic Basis o Two Year Stack Of
Slide 6: Linear Motion Overview
2Q 2023 LINEAR MOTION OVERVIEW Creating a better tomorrow™… 6 ©2023 Regal Rexnord Corporation, Proprietary and Confidential
Slide 7: Opening Comments & Overview; 2Q 2023 Results, 2023 Outlook
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 2Q 2023 Results, 2023 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 8: Automation & Motion Control: Strong Execution Driving Growth & Margin Initiatives
2Q 2023 AUTOMATION & MOTION CONTROL Sales • Pro Forma Organic Sales* Up 4.0% • Key Drivers o Aerospace (+) o Medical (+) o Data Center (+) 24.5% 25.3% * Non-GAAP Financial Measurement, See Appendix For Reconciliation Strong Execution Driving Growth & Margin Initiatives Creating a better tomorrow™… 8
Slide 9: Industrial Powertrain Solutions: Executing Integration & Synergy Plans
2Q 2023 INDUSTRIAL POWERTRAIN SOLUTIONS Sales • Pro Forma Organic Sales* up 0.6% • Key Drivers o Metals & Mining (+) o Energy (+) $53. o Marine (+) $235.2 5 $43. 4 26.9% 23.6% * Non-GAAP Financial Measurement, See Appendix For Reconciliation Creating a better tomorrow™… Executing Integration & Syner
Slide 10: Power Efficiency Solutions: Driving Margin Expansion Plans
2Q 2023 POWER EFFICIENCY SOLUTIONS Sales • Organic Sales* Down 22.2% • Key Drivers o Channel Destocking (-) $165. o N.A. Resi HVAC (-) 5 $39.0 o China (-) $135. 7 $21.3 16.8% 18.6% $189.8 * Non-GAAP Financial Measurement, See Appendix For Reconciliation Driving Margin Expansion Plans While Navigatin
Slide 11: Other Financial Updates
2Q 2023 OTHER FINANCIAL UPDATES Capital Expenditures Balance Sheet at June 30, 2023 • Total Debt of $6,682.3 Million • $44.8 Million in 2Q 2023 • Net Debt* of $6,022.7 Million • Net Debt*/Normalized Adj. EBITDA* of 3.86** Effective Tax Rate (ETR) • 22.8% Adj. ETR* in 2Q 2023 Free Cash Flow* • $176.3
Slide 12: 2023 Outlook Update
2Q 2023 2023 OUTLOOK UPDATE • Revising 2023 Outlook For Adjusted EPS* Down To A Range Of $10.20 - $10.60 (M/P $10.40) From A Prior Range Of $10.20 - $11.10 (M/P $10.65). ◦ Estimate For Depreciation Expense Rising By ~$10 Million ◦ Estimate For Net Interest Expense Rising By ~$9 Million ◦ Lowering Hi
Slide 13: Questions & Answers
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 2Q 2023 Results, 2023 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 14: Closing Remarks
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 2Q 2023 Results, 2023 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 15: Adjusted Diluted Earnings Per Share
2Q 2023 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Six Months Ended Jun 30, Jun 30, Jun 30, Jun 30, 2023 2022 2023 2022 GAAP Diluted Earnings Per Share $ 0.48 $ 2.12 $ 0.39 $ 3.96 Intangible Amortization 1.02 0.53 1.54 1.05 Transaction and Related Costs (a) 0.16 0.01 1.48 0.05 I
Slide 16: 2023 Adjusted Annual Guidance
2Q 2023 APPENDIX 2023 ADJUSTED ANNUAL GUIDANCE Minimum Maximum 2023 GAAP Diluted EPS Annual Guidance $ 2.69 $ 3.09 Intangible Amortization 3.60 3.60 Transaction and Related Costs (a) 1.55 1.55 Restructuring and Related Costs (b) 0.85 0.85 Share-Based Compensation Expense (c) 0.80 0.80 Inventory Step
Slide 17: 2023 Net Income to Adjusted EBITDA Annual Guidance
2Q 2023 APPENDIX 2023 NET INCOME TO ADJUSTED EBITDA ANNUAL GUIDANCE (Dollars in Millions) Minimum Maximum Net Income $ 224.8 $ 253.7 Plus: Income Taxes 82.4 88.0 Plus: Interest Expense 399.0 399.0 Less: Interest Income (44.0) (44.0) Plus: Depreciation 165.0 165.0 Plus: Amortization 315.0 315.0 EBITD
Slide 18: Adjusted EBITDA - Three Months Ended
2Q 2023 APPENDIX Three Months Ended Industrial Powertrain Power Efficiency Automation & Total Regal ADJUSTED EBITDA Solutions Solutions Motion Control Industrial Systems Rexnord (Dollars in Millions) Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, 2023 2022 2023 2022
Slide 19: Adjusted EBITDA - Six Months Ended
2Q 2023 APPENDIX Six Months Ended Industrial Powertrain Power Efficiency Automation & Total Regal ADJUSTED EBITDA Solutions Solutions Motion Control Industrial Systems Rexnord (Dollars in Millions) Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, 2023 2022 2023 2022 20
Slide 20: Net Income to Adjusted EBITDA
2Q 2023 APPENDIX NET INCOME TO ADJUSTED EBITDA (Dollars in Millions) Three Months Ended Six Months Ended Jun 30, Jun 30, Jun 30, Jun 30, 2023 2022 2023 2022 Net Income $ 33.2 $ 143.2 $ 27.7 $ 270.3 Plus: Income Taxes 9.9 40.6 22.2 76.8 Plus: Interest Expense 116.4 13.4 211.8 22.4 Less: Interest Inco
Slide 21: Adjusted Net Sales
2Q 2023 APPENDIX ADJUSTED NET SALES (Dollars in Millions) Three Months Ended Industrial Powertrain Power Efficiency Automation & Solutions Solutions Motion Control Industrial Systems Total Regal Rexnord Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, 2023 2022 2023 20
Slide 22: Adjusted Effective Tax Rate
2Q 2023 APPENDIX ADJUSTED EFFECTIVE TAX RATE Three Months Ended Six Months Ended Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Jun 30, 2022 Income before Taxes $ 43.1 $ 183.8 $ 49.9 $ 347.1 Provision for Income Taxes 9.9 40.6 22.2 76.8 Effective Tax Rate 22.9 % 22.1 % 44.5 % 22.1 % Income before Taxes $ 43
Slide 23: Free Cash Flow
2Q 2023 APPENDIX FREE CASH FLOW Three Months Ended Six Months Ended Jun 30, Jun 30, Jun 30, Jun 30, 2023 2022 2023 2022 Net Cash Provided by Operating Activities $ 221.1 $ 110.8 $ 327.3 $ 104.9 Payments for Certain Acquisition Costs (Net of Tax of $11.4 Million) (a) — — 86.9 — Adjusted Cash Flows fr
Slide 24: Organic Sales Growth - Three Months
2Q 2023 APPENDIX ORGANIC SALES GROWTH Three Months Ended June 30, 2023 Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Jun 30, 2023 $ 698.7 $ 460.1 $ 473.1 $ 136.7 $ 1,768.6 Net Sales from Busi
Slide 25: Organic Sales Growth - Six Months
2Q 2023 APPENDIX ORGANIC SALES GROWTH Six Months Ended June 30, 2023 Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Jun 30, 2023 $ 1,113.1 $ 929.6 $ 676.3 $ 273.7 $ 2,992.7 Net Sales from Busi
Slide 26: Debt to EBITDA
2Q 2023 APPENDIX DEBT TO EBITDA Last Twelve Months Jun 30, 2023 Proforma Net Income (d) $ 120.7 Plus: Income Taxes 26.9 Plus: Interest Expense 479.1 Less: Interest Income (11.1) Plus: Depreciation 186.6 Plus: Amortization 347.3 Proforma EBITDA* $ 1,149.5 Plus: Transaction and Related Costs (a) 111.1
Slide 27: Pro Forma Organic Sales Growth - Three Months
2Q 2023 APPENDIX PRO FORMA ORGANIC SALES GROWTH (INCLUDING ALTRA) Three Months Ended June 30, 2023 Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Jun 30, 2023 $ 698.7 $ 460.1 $ 473.1 $ 136.7 $
Slide 28: Pro Forma Organic Sales Growth - Six Months
2Q 2023 APPENDIX PRO FORMA ORGANIC SALES GROWTH (INCLUDING ALTRA) Six Months Ended June 30, 2023 Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Six Months Ended Jun 30, 2023 $ 1,113.1 $ 929.6 $ 676.3 $ 273.7 $ 2
Slide 29: Pro Forma Net Income to Adjusted EBITDA
2Q 2023 APPENDIX Three Months PRO FORMA NET INCOME TO ADJUSTED EBITDA Ended Jun 30, 2022 Pro Forma Net Income $ 71.6 Plus: Income Taxes 41.6 Plus: Interest Expense 99.9 Plus: Interest Income (0.8) Plus: Depreciation 49.1 Plus: Amortization 87.3 Pro Forma EBITDA $ 348.7 Plus: Transaction and Related
Slide 30: Linear Motion End Markets: Intralogistics, Medical & Health
2Q 2023 APPENDIX - LINEAR MOTION END MARKETS Intralogistics Medical & Health Key Products: Example Application: Key Products: Example Application: Actuators, Lead & Adjustment of Conveyor & Lead Screws, Linear Automation of Clinical Ball Screws & Lifting Diverter Positions Bearings & Guides, Diagnos
Slide 31: Linear Motion End Markets: Aerospace & Defense, Agriculture
2Q 2023 APPENDIX - LINEAR MOTION END MARKETS Aerospace & Defense Agriculture Key Products: Example Application: Key Products: Example Application: Lead & Ball Screws, Movement of Aircraft Actuators Automation of Harvesting Actuators, Linear Wing Flap Combine Movements Bearings, Guides, Servo Coils,