Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Q4 2021 Earnings Presentation
28 slides from Regal Rexnord's earnings presentation, Feb 3, 2022
Slide 1: Fourth Quarter 2021 Earnings
Creating a better tomorrow™… Fourth Quarter 2021 Earnings February 3, 2022 Louis Pinkham, Chief Executive Officer Rob Rehard, Vice President, Chief Financial Officer
Slide 2: Forward Looking Statements
4Q 2021 FORWARD LOOKING STATEMENTS This document 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: Non-GAAP Financial Measures
4Q 2021 NON-GAAP FINANCIAL MEASURES We prepare financial statements in accordance with accounting principles generally accepted income attributable to Regal Rexnord Corporation, adjusted income before taxes, adjusted in the United States of America (“GAAP”). We also periodically disclose certain fin
Slide 4: Opening Comments & Overview
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2021 Results, 2022 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 5: Opening Comments
4Q 2021 OPENING COMMENTS • Strong Organic Sales Growth, Achieved ($ in millions, except per share Positive Price/Cost, Exceeded Adjusted EPS data) 4Q 2020 4Q 2021 Mid-Point Target Adjusted Net Sales* $780.5 $1,216.6 • Remain Focused On 80/20, Price Discipline, Over-Managing Supply Chain Challenges A
Slide 6: Powertrain Solutions – Pipeline Examples
4Q 2021 POWERTRAIN SOLUTIONS – PIPELINE EXAMPLES Mining Conveyor System Cooling Tower “Better Together” – Optimized performance, “Better Together” – Optimized performance, greater reliability, more energy efficient, IoT greater reliability, more energy efficient, Perceptiv® intelligence simpler supp
Slide 7: Opening Comments
4Q 2021 OPENING COMMENTS • Raising 2022 EPS Outlook Range • Widening Range • Very Strong Demand & Record Backlog But Inflation & Supply Chain Uncertainty Creating a better tomorrow™… 7 ©2021 Regal Rexnord Corporation, Proprietary and Confidential
Slide 8: Opening Comments & Overview
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2021 Results, 2022 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 9: Motion Control Solutions
4Q 2021 MOTION CONTROL SOLUTIONS Sales • Organic Sales* Up 4.9% Adjusted Net Sales* Adjusted EBITDA* • Key Drivers ($ Millions) ($ Millions) • Food & Beverage • General Industrial • Agriculture $547.0 $39.0 • Wind Projects (-) $134.0 Adjusted EBITDA Margin* • 24.5% of Adj. Net Sales $21.3 $189.8 $46
Slide 10: Climate Solutions
4Q 2021 CLIMATE SOLUTIONS Sales • Organic Sales* Up 18.4% Adjusted Net Sales* Adjusted EBITDA* • Key Drivers ($ Millions) ($ Millions) • N.A. HVAC $166.9 • N.A. General Industrial $265.8 $268.4 166.9 $268.4 • EMEA Strength Adjusted EBITDA Margin* $52.7 • 19.8% of Adj. Net Sales $224.5 $47.3 4Q20 4Q2
Slide 11: Commercial Systems
4Q 2021 COMMERCIAL SYSTEMS Sales • Organic Sales* Up 13.0% Adjusted Net Sales* Adjusted EBITDA* • Key Drivers ($ Millions) ($ Millions) • C-HVAC • N.A. General Industrial $257.1 Adjusted EBITDA Margin* • 11.1% of Adj. Net Sales $226.4 $32.3 $28.6 4Q20 4Q21 4Q20 4Q21 * Non-GAAP Financial Measurement,
Slide 12: Industrial Systems
4Q 2021 INDUSTRIAL SYSTEMS Sales • Organic Sales* Up 4.5% Adjusted Net Sales* Adjusted EBITDA* ($ Millions) ($ Millions) Adjusted EBITDA Margin* $146.7 • 8.6% of Adj. Net Sales $139.8 $12.6 $9.2 4Q20 4Q21 4Q20 4Q21 * Non-GAAP Financial Measurement, See Appendix for Reconciliation. Creating a better
Slide 13: Key Financial Metrics & Other Updates
4Q 2021 KEY FINANCIAL METRICS & OTHER UPDATES Capital Expenditures Balance Sheet at January 1, 2022 • $17.0 Million in 4Q 2021 • Total Debt of $1,918.5 Million • Net Debt of $1,245.7 Million Effective Tax Rate (ETR) • Net Debt/Adj. Bank EBITDA* of 1.8 • 22.3% Adj. ETR* in 4Q 2021 • Net Debt/Adj. Ban
Slide 14: Updating 2022 Outlook
4Q 2021 UPDATING 2022 OUTLOOK • Raising Guidance for 2022 Revenue from Approximately $5.1 Billion to Approximately $5.2 Billion; Current Guidance Reflects Total Revenue Growth at a Mid-Single Digit to a High Single Digit Rate. • Raising Adjusted Diluted Earnings per Share* Range to $10.00 to $10.60
Slide 15: Opening Comments & Overview
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2021 Results, 2022 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 16: Opening Comments & Overview
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2021 Results, 2022 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 17: Adjusted Diluted Earnings Per Share
4Q 2021 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Twelve Months Ended Jan 1, Jan 2, Jan 1, Jan 2, 2022 2021 2022 2021 GAAP Diluted Earnings Per Share $ (0.07) $ 1.23 $ 4.40 $ 4.64 Restructuring and Related Costs 0.13 0.26 0.35 0.69 Transaction and Related Costs 0.73 0.01 2.03 0
Slide 18: 2022 Adjusted Annual Guidance
4Q 2021 APPENDIX 2022 ADJUSTED ANNUAL GUIDANCE Minimum Maximum 2022 Diluted EPS Annual Guidance $ 6.95 $ 7.55 Restructuring and Related Costs 0.50 0.50 Transaction and Related Costs 0.02 0.02 Inventory Step Up 0.04 0.04 Intangible Amortization 2.10 2.10 Stock Based Compensation 0.39 0.39 2022 Adjust
Slide 19: Adjusted EBITDA
4Q 2021 APPENDIX Three Months Ended Commercial Motion Control ADJUSTED EBITDA Systems Industrial Systems Climate Solutions Solutions Total Regal Rexnord (Dollars in Millions) Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 GAAP
Slide 20: Adjusted EBITDA
4Q 2021 APPENDIX Twelve Months Ended Commercial Motion Control ADJUSTED EBITDA Systems Industrial Systems Climate Solutions Solutions Total Regal Rexnord (Dollars in Millions) Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 GAAP
Slide 21: Adjusted Net Sales
4Q 2021 APPENDIX Three Months Ended Commercial Motion Control ADJUSTED NET SALES Systems Industrial Systems Climate Solutions Solutions Total Regal Rexnord (Dollars in Millions) Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, Jan 1, Jan 2, 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Ne
Slide 22: Adjusted Effective Tax Rate
4Q 2021 APPENDIX ADJUSTED EFFECTIVE TAX RATE Three Months Ended Twelve Months Ended (Dollars in Millions) Jan 1, Jan 2, Jan 1, Jan 2, 2022 2021 2022 2021 Income before Taxes $ 8.1 $ 68.8 $ 284.6 $ 250.6 Provision for Income Taxes 11.3 17.3 68.5 56.8 Effective Tax Rate 139.5% 25.1% 24.1% 22.7% Income
Slide 23: Free Cash Flow
4Q 2021 APPENDIX Three Months Twelve Months FREE CASH FLOW Ended Ended (Dollars in Millions) Jan 1, Jan 2, Jan 1, Jan 2, 2022 2021 2022 2021 Net Cash Provided by Operating Activities $ 99.6 $ 125.5 $ 357.7 $ 435.4 Additions to Property Plant and Equipment (17.0) (17.8) (54.5) (47.5) Free Cash Flow $
Slide 24: Organic Sales Growth
4Q 2021 APPENDIX ORGANIC SALES GROWTH Three Months Ended (Dollars in Millions) Motion Commercial Industrial Climate Control Total Regal Systems Systems Solutions Solutions Rexnord Net Sales Three Months Ended Jan 1, 2022 $ 257.1 $ 146.7 $ 265.8 $ 547.0 $ 1,216.6 Net Sales from Business Acquired - -
Slide 25: Total Gross Debt/EBITDA
4Q 2021 APPENDIX TOTAL GROSS DEBT/EBITDA TOTAL GROSS DEBT/ADJUSTED BANK EBITDA (Dollars in Millions) (Dollars in Millions) LTM Jan 1, LTM Jan 1, 2022 2022 Net Income $ 216.1 Net Income $ 216.1 Plus: Income Taxes 68.5 Plus: Income Taxes 68.5 Plus: Interest Expense 60.4 Plus: Interest Expense 60.4 Les
Slide 26: Total Net Debt/EBITDA
4Q 2021 APPENDIX TOTAL NET DEBT/EBITDA TOTAL NET DEBT/ADJUSTED BANK EBITDA (Dollars in Millions) (Dollars in Millions) LTM Jan 1, LTM Jan 1, 2022 2022 Net Income $ 216.1 Net Income $ 216.1 Plus: Income Taxes 68.5 Plus: Income Taxes 68.5 Plus: Interest Expense 60.4 Plus: Interest Expense 60.4 Less: I
Slide 27: Shipping Days
4Q 2021 APPENDIX Shipping 1Q 2Q 3Q 4Q FY Days 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 2022 63 64 63 60 250 ▪ Regal historically operated on a 52/53 week fiscal year ending on the Saturday closest to December 31. ▪
Slide 28: Regal Rexnord Snapshot
4Q 2021 APPENDIX – REGAL REXNORD SNAPSHOT Sales by Segment Sales by End Market (a) Includes aggregates processing Alt. E., 4% Other (d), 12% (b) Includes “cold chain”-related Industrial, 13% Warehouse, 3% G.I., 21% (c) End markets in non-manufacturing ISM Climate, 20% not included elsewhere Power Ge