Slide 1: First Quarter 2019 Earnings Conference Call
First Quarter 2019 Earnings Conference Call May 7, 2019 Louis Pinkham Jon Schlemmer Chief Executive Officer Chief Operating Officer Rob Rehard Robert Cherry Vice President Vice President Chief Financial Officer Business Development & Investor Relations Creating a better tomorrow™… ©2019 Regal Beloit
Slide 2: Safe Harbor Statement
Safe Harbor Statement The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: With the exception of historical facts, the statements contained in this presentation may be forward-looking statements. Forward-looking statements represent our management’
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”). We also periodically disclose certain financial measures in our quarterly earnings releases, on investor conference calls, and in investor presentati
Slide 4: Agenda
Agenda Opening Comments Louis Pinkham, CEO 1Q Results & 2019 Outlook Rob Rehard, CFO Operations Update Jon Schlemmer, COO Summary Louis Pinkham, CEO Q&A All Creating a better tomorrow™… ©2019 Regal Beloit Corporation, Proprietary and Confidential 11/26/2018 │ 4
Slide 5: Opening Comments
Opening Comments Creating a better tomorrow™… ©2019 Regal Beloit Corporation, Proprietary and Confidential 11/26/2018 │ 5
Slide 6: Overview
Overview 1Q 2019 Results – Organic Growth of (1.0%) – Adjusted Operating Margin* of 11.0%, Up 60 bps – Adjusted Diluted EPS* Up 13% – Net Debt to Adj. EBITDA* of 1.8 Expecting FY 2019 Operating Margin Improvement – Productivity Takeaway message goes here (16 pt.) – New Products – Pruning Reaff
Slide 7: 1st Quarter 2019 Financial Results
1st Quarter 2019 Financial Results 1Q 2019 Net Sales of $853.8 Million, Down 2.8% – Acquisitions Contributed 3.9% – Business Divested/to be Exited (4.0%) – Foreign Currency Impact of (1.7%) – Organic Sales Down 1.0% Adjusted Operating Margin* of 11.0% – Up 60 bps from 1QTakeaway 2018 message goe
Slide 8: 1st Quarter 2019 Financial Results
1st Quarter 2019 Financial Results ADJUSTED DILUTED EARNINGS PER SHARE* Three Months Ended Mar 30, Mar 31, 2019 2018 GAAP Diluted Earnings Per Share $ 1.99 $ 1.31 Restructuring and Related Costs 0.04 0.03 (Gain) Loss on Business Divested and Assets to be Exited (0.59) — Net Income from Businesses Di
Slide 9: 1st Quarter 2019 Key Financial Metrics
1st Quarter 2019 Key Financial Metrics Capital Expenditures Effective Tax Rate (ETR) $20.2 Million in 1Q 2019 20.7% Adj. ETR* in 1Q 2019 $90.0 Million expected in FY 2019 21.0% Adj. ETR expected in FY 2019 Restructuring and Related Costs $2.3 Million in 1Q 2019 $10.0 Million expected in
Slide 10: 2019 Full Year Guidance
2019 Full Year Guidance Expected Performance − Low Single Digit Organic Sales Growth − Improvement in Adjusted Operating Margin − Free Cash Flow to Exceed Adjusted Net Income FY 2019 GAAP Diluted EPS Guidance of $6.68 to $7.08 FY 2019 Adjusted Diluted EPS* Guidance of $6.15 to $6.55 − Expectin
Slide 11: 1Q 2019 Commercial & Industrial Systems
1Q 2019 Commercial & Industrial Systems Sales Adj. Income from Organic Sales Down 6.3% Adj. Net Sales* Operations* ($ millions) Market Performance – Power Generation Project Timing $381 $380 $27 – Asia and Europe $23 – NA Pool Pump + NA Distribution + NA Commercial HVAC & General Industrial Take
Slide 12: 1Q 2019 Climate Solutions
1Q 2019 Climate Solutions Sales Adj. Income from Adj. Net Sales* Operations* Organic Sales Up 3.6% ($ millions) Market Performance + NA Resi HVAC (HSD) $242 $248 $39 Fan Energy Rating (FER) Pre-build $31 + Commercial Refrigeration – China, Middle East and Europe Takeaway message goes here (16 pt
Slide 13: 1Q 2019 Power Transmission Solutions
1Q 2019 Power Transmission Solutions Sales Adj. Income from Organic Sales Up 3.4% Adj. Net Sales* Operations* ($ millions) Market Performance + Distribution $201 $205 $30 + Oil & Gas $27 – Agriculture – Beverage Takeaway message goes here (16 pt.) Adj. Operating Margin* 14.4% of Adj. Net Sales
Slide 14: Tariff Mitigation and FER
Tariff Mitigation and FER Tariff Mitigation Actions Full Range of FER Solutions Mexico Industrial Motor Facility DEC Star® Highest Efficiency Solution ECM 3.0+ High Efficiency Motor Takeaway message goes here (16 pt.) Ensite™ ECM Motor Efficiency and Features Strategic Investments in Inventory to Su
Slide 15: 1st Quarter 2019 Summary
1st Quarter 2019 Summary + Climate and PTS Organic Sales Growth and Operating Margin + Total Company Adjusted Operating Margin* Up 60 bps + Adjusted Diluted EPS* Up 13% + Net Debt to Adj. Takeaway EBITDA* Reduced messageto goes 1.8 here (16 pt.) − C&I Organic Sales Growth and Operating Margin − Free
Slide 16: Questions and Answers
Questions and Answers Creating a better tomorrow™… ©2019 Regal Beloit Corporation, Proprietary and Confidential
Slide 17: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Mar 30, Mar 31, 2019 2018 GAAP Diluted Earnings Per Share $ 1.99 $ 1.31 Restructuring and Related Costs 0.04 0.03 (Gain) Loss on Business Divested and Assets to be Exited (0.59) — Net Income from Businesses Dive
Slide 18: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months Ended Commercial & Power Transmission ADJUSTED INCOME FROM OPERATIONS Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Mar 30, Mar 31, Mar 30, Mar 31, Mar 30, Mar 31, Mar 30, Mar 31, 2019 2018 2019 2018 2019 2018 2019 201
Slide 19: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months Ended Commercial & Power Transmission ADJUSTED NET SALES Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Mar 30, Mar 31, Mar 30, Mar 31, Mar 30, Mar 31, Mar 30, Mar 31, 2019 2018 2019 2018 2019 2018 2019 2018 Net Sales $
Slide 20: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations The following tables outline the first and second quarter 2018 net sales and income from operations illustrating the impact of businesses divested and to be exited, which can be used to compare to Regal's 2019 guidance and actual performance. Commercial Power & Indu
Slide 21: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations The following tables outline the third and fourth quarter 2018 net sales and income from operations illustrating the impact of businesses divested and to be exited, which can be used to compare to Regal's 2019 guidance and actual performance. Commercial Power & Indu
Slide 22: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations The following tables outline the full year 2018 net sales and income from operations, and the full year adjusted diluted earnings per share, illustrating the impact of businesses divested and to be exited, which can be used to compare to Regal's 2019 guidance and ac
Slide 23: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED EFFECTIVE TAX RATE Three Months Ended Mar 30, Mar 31, 2019 2018 Income before Taxes $ 108.0 $ 75.0 Provision for Income Taxes 21.2 15.7 Effective Tax Rate 19.6% 20.9% Income before Taxes $ 108.0 $ 75.0 (Gain) Loss on Business Divested and Assets to be Exite
Slide 24: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months FREE CASH FLOW Ended (Dollars in Millions) Mar 30, Mar 31, 2019 2018 Net Cash Provided by Operating Activities $ 18.3 $ 42.5 Additions to Property Plant and Equipment (20.2) (19.3) Free Cash Flow $ (1.9) $ 23.2 Creating a better tomorrow™… ©2019 Regal B
Slide 25: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ORGANIC SALES GROWTH Three Months Ended (Dollars in Millions) Commercial & Power Industrial Climate Transmission Systems Solutions Solutions Total Regal Net Sales Three Months Ended Mar 30, 2019 $ 380.3 $ 263.3 $ 210.2 $ 853.8 Net Sales from Business Acquired (31.7)
Slide 26: Total Net Debt/Adjusted EBITDA
Appendix Non-GAAP Reconciliations TOTAL NET DEBT/ADJUSTED EBITDA (Dollars in Millions) LTM Mar 30, 2019 Net Income $ 263.3 Plus: Taxes 61.9 Plus: Interest Expense 55.8 Less: Interest Income (2.8) Plus: Depreciation and Amortization 141.9 Plus: Restructuring and Related Costs 8.3 Plus: Purchase Accou
Slide 27: Regal Shipping Days
Appendix Regal Shipping Days 1Q 2Q 3Q 4Q FY 2014 63 63 63 64 253 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 Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31 Fiscal Years 2015, 2016, 2017, 2018 a