Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Q4 2023 Earnings Presentation
38 slides from Regal Rexnord's earnings presentation, Feb 8, 2024
Slide 1: Fourth Quarter 2023 Earnings
Creating a better tomorrow™… Fourth Quarter 2023 Earnings February 8, 2024 Moti Louis Pinkham, Chief Executive Officer on Co Indus Rob Rehard, Executive Vice President, Chief Financial Officer ntrol trial S Solut ystem ions s
Slide 2: 4Q 2023 Forward Looking Statements
4Q 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: 4Q 2023 Non-GAAP Financial Measures
4Q 2023 NON-GAAP FINANCIAL MEASURES We prepare our financial statements in accordance with accounting principles generally In addition to these non-GAAP measures, we use the term “organic sales growth” and "pro accepted in the United States of America (“GAAP”). We also periodically disclose certain
Slide 4: Agenda
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2023 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 5: 4Q 2023 Opening Comments & Overview
4Q 2023 OPENING COMMENTS & OVERVIEW • Delivered On 4Q Commitments, Including Strong Execution Pro Forma Adjusted Pro Forma Adjusted On FCF And Margins Net Sales* EBITDA* & Margin* • 2023 Characterized By Robust FCF Generation, Solid Margin Performance And Transformational Portfolio Change $1,714.1 $
Slide 6: Micro Motion Overview
4Q 2023 MICRO MOTION OVERVIEW Profile Key Growth Markets & Applications 2023 Sales ~$150 Million Surgical Solutions Infusion & Cardio Support Key Products: Key Products: 2023 Organic Growth +22% Sterilizable Brushless Slotless & Coreless DC, Brushless Slotless and Slotted Motors, Controllers, Encode
Slide 7: Agenda
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2023 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 8: Automation & Motion Control: Strong Execution In A Mixed End Market Environment
4Q 2023 AUTOMATION & MOTION CONTROL Sales Pro Forma Adjusted Pro Forma Adjusted Net Sales* ($M) EBITDA* ($M) & • Pro Forma Organic Net Sales Down 3.0% (Full Year Up 3.1%) EBITDA Margin* • Key Drivers $431.4 $420.7 o Aerospace (+) o Data Center (+) o Medical (+) $102.9 $104.4 o Factory Automation (-)
Slide 9: Industrial Powertrain Solutions: Synergy Benefits Offsetting Mix Headwinds
4Q 2023 INDUSTRIAL POWERTRAIN SOLUTIONS Sales Pro Forma Adjusted Pro Forma Adjusted • Pro Forma Organic Net Sales* Net Sales* ($M) EBITDA* ($M) & Down 1.5% EBITDA Margin* • Key Drivers $651.6 $649.7 o Aerospace (+) o Energy (+) $53. $235.2 5 $155.2 $155.7 o Alternative Energy (-) $43. o Food & Bever
Slide 10: Power Efficiency Solutions: Preserving Margins In The Face Of Top Line Headwinds
4Q 2023 POWER EFFICIENCY SOLUTIONS Sales Adjusted Net Sales* Adjusted EBITDA* • Organic Sales* Down 16.0% ($M) ($M) & EBITDA • Key Drivers Margin o N.A. Residential HVAC, $165. $495.5 Particularly Heating (-) 5 $39.0 $418.0 $135. 7 $89.2 $75.5 $21.3 18.0% 18.1% 4Q22 4Q23 4Q22 4Q23 $189.8 * Non-GAAP
Slide 11: Other Financial Updates
4Q 2023 OTHER FINANCIAL UPDATES Capital Expenditures Balance Sheet at December 31, 2023 • $30.4 Million in 4Q 2023 • Total Debt of $6,380.9 Million • Net Debt* of $5,745.6 Million • Net Debt*/Proforma Adj EBITDA (Including Effective Tax Rate (ETR) Synergies)* of 3.80 • Interest Coverage Ratio (Inclu
Slide 12: 2024 Outlook
4Q 2023 2024 OUTLOOK • Introducing Outlook For 2024 Adjusted Diluted EPS* In A Range Of $9.75 - $10.55 (M/P $10.15) • Revenue For 2024 Expected To Be ~$6.65 Billion • Adjusted EBITDA Margin For 2024 Expected To Be ~22% • Guidance Includes Industrial Motors & Generators Businesses For Full Year 2024
Slide 13: Segment Outlook
4Q 2023 SEGMENT OUTLOOK Expect Stronger 2H Performance As Destocking Pressures Abate Creating a better tomorrow™… 13 ©2023 Regal Rexnord Corporation, Proprietary and Confidential
Slide 14: Agenda
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2023 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 15: Agenda
4Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2023 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 16: Adjusted Diluted Earnings Per Share
4Q 2023 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Unaudited Three Months Ended Year Ended Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2023 2022 GAAP Earnings (Loss) Per Share $ 0.84 $ 1.53 $ (0.87) $ 7.29 Intangible Amortization 0.96 0.52 3.49 2.09 (a) Restructuring and Related Costs 0.50 0.21 0.96
Slide 17: 2024 Adjusted Annual Guidance
4Q 2023 APPENDIX 2024 ADJUSTED ANNUAL GUIDANCE Unaudited Minimum Maximum 2024 GAAP Diluted EPS Annual Guidance $ 4.58 $ 5.38 Intangible Amortization 4.00 4.00 (a) Restructuring and Related Costs 0.42 0.42 Share-Based Compensation Expense 0.58 0.58 Operating Lease Asset Step Up 0.01 0.01 (b) Transact
Slide 18: 2024 Net Income to Adjusted EBITDA Annual Guidance
4Q 2023 APPENDIX 2024 NET INCOME TO ADJUSTED EBITDA ANNUAL GUIDANCE Unaudited (Dollars in Millions) Minimum Maximum Net Income $ 309.7 $ 362.9 Plus: Income Taxes 97.8 114.6 Plus: Interest Expense 383.8 383.8 Less: Interest Income (7.8) (7.8) Plus: Depreciation 185.0 185.0 Plus: Amortization 350.0 35
Slide 19: Adjusted EBITDA Three Months Ended
4Q 2023 APPENDIX ADJUSTED EBITDA Three Months Ended Industrial Unaudited Powertrain Power Efficiency Automation & Industrial Total Regal Solutions Solutions Motion Control Systems Rexnord (Dollars in Millions) Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022
Slide 20: Adjusted EBITDA Year Ended
4Q 2023 APPENDIX ADJUSTED EBITDA Year Ended Industrial Unaudited Powertrain Power Efficiency Automation & Industrial Total Regal Solutions Solutions Motion Control Systems Rexnord (Dollars in Millions) Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2023 202
Slide 21: Net Income to Adjusted EBITDA
4Q 2023 APPENDIX NET INCOME TO ADJUSTED EBITDA Unaudited (Dollars in Millions) Three Months Ended Year Ended Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2023 2022 Net Income (Loss) $ 56.6 $ 102.7 $ (54.3) $ 494.9 Plus: Income Taxes 17.8 8.9 52.7 118.9 Plus: Interest Expense 107.7 43.4 431.0 87.2 Less:
Slide 22: Adjusted Net Sales
4Q 2023 APPENDIX ADJUSTED NET SALES Unaudited (Dollars in Millions) Three Months Ended Industrial Powertrain Power Efficiency Automation & Total Regal Solutions Solutions Motion Control Industrial Systems Rexnord Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2023 20
Slide 23: Adjusted Effective Tax Rate
4Q 2023 APPENDIX ADJUSTED EFFECTIVE TAX RATE Unaudited (Dollars in Millions) Three Months Ended Year Ended Dec 31, 2023 Dec 31, 2022 Dec 31, 2023 Dec 31, 2022 Income (Loss) before Taxes $ 74.4 $ 111.6 $ (1.6) $ 613.8 Provision for Income Taxes 17.8 8.9 52.7 118.9 Effective Tax Rate 23.9 % 8.0 % (3,2
Slide 24: Adjusted Free Cash Flow
4Q 2023 APPENDIX ADJUSTED FREE CASH FLOW Unaudited (Dollars in Millions) Three Months Ended Year Ended Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2023 2022 Net Cash Provided by Operating Activities $ 201.3 $ 198.2 $ 715.3 $ 436.2 Payments for Certain Acquisition Costs (Net of Tax of $11.4 Million) (a
Slide 25: Organic Sales Growth
4Q 2023 APPENDIX ORGANIC SALES GROWTH Unaudited (Dollars in Millions) Three Months Ended Industrial Power Automation Powertrain Efficiency & Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Dec 31, 2023 $ 649.7 $ 418.0 $ 420.7 $ 119.8 $ 1,608.2 N
Slide 26: Organic Sales Growth
4Q 2023 APPENDIX ORGANIC SALES GROWTH Unaudited (Dollars in Millions) Year Ended Industrial Power Automation Powertrain Efficiency & Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Year Ended Dec 31, 2023 $ 2,403.5 $ 1,808.9 $ 1,516.8 $ 521.5 $ 6,250.7 Net Sales f
Slide 27: Debt to EBITDA
4Q 2023 APPENDIX DEBT TO EBITDA Unaudited (Dollars in Millions) Last Twelve Months Dec 31, 2023 Proforma Net Loss (a) $ (84.4) (a) Includes Altra results. (b) Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line exits and oth
Slide 28: Proforma Net Loss
4Q 2023 APPENDIX PROFORMA NET LOSS Unaudited (Dollars in Millions) The following proforma net loss has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Altra Transaction and related debt financing as if they had occurred on January 2, 2022, the first day o
Slide 29: Pro Forma Organic Sales Growth (Including Altra)
4Q 2023 APPENDIX PRO FORMA ORGANIC SALES GROWTH (INCLUDING ALTRA) Unaudited (Dollars in Millions) Three Months Ended December 31, 2023 Industrial Power Automation Powertrain Efficiency & Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Dec 31, 20
Slide 30: Pro Forma Organic Sales Growth (Including Altra)
4Q 2023 APPENDIX PRO FORMA ORGANIC SALES GROWTH (INCLUDING ALTRA) Unaudited (Dollars in Millions) Year Ended December 31, 2023 Industrial Power Automation Powertrain Efficiency & Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Year Ended Dec 31, 2023 $ 2,403.5 $ 1
Slide 31: Adjusted Gross Margin
4Q 2023 APPENDIX ADJUSTED GROSS MARGIN Unaudited (Dollars in Millions) Three Months Ended December 31, 2023 Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales $ 649.7 $ 418.0 $ 420.7 $ 119.8 $ 1,608.2 Gross Margin $
Slide 32: Adjusted Gross Margin
4Q 2023 APPENDIX ADJUSTED GROSS MARGIN Unaudited (Dollars in Millions) Year Ended December 31, 2023 Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales $ 2,403.5 $ 1,808.9 $ 1,516.8 $ 521.5 $ 6,250.7 Gross Margin $ 8
Slide 33: Adjusted Gross Margin
4Q 2023 APPENDIX ADJUSTED GROSS MARGIN Unaudited (Dollars in Millions) Year Ended December 31, 2022 Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales $ 1,666.3 $ 2,227.2 $ 772.3 $ 552.1 $ 5,217.9 Gross Margin $ 653
Slide 34: Pro Forma Net Income to Adjusted EBITDA
4Q 2023 APPENDIX PRO FORMA NET INCOME TO ADJUSTED EBITDA Unaudited (Dollars in Millions) Three Months Ended Year Ended Dec 31, 2022 Dec 31, 2023 Dec 31, 2022 Pro Forma Net Sales $ 1,714.1 $ 6,701.8 $ 7,162.1 Nets Sales from Businesses Divested/to be Exited (a) — — (40.1) Pro Forma Adjusted Net Sales
Slide 35: Proforma Net Income
4Q 2023 APPENDIX PROFORMA NET INCOME Unaudited (Dollars in Millions) The following proforma net income has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Altra Transaction and related debt financing as if they had occurred on January 2, 2022, the first d
Slide 36: Proforma Net Income
4Q 2023 APPENDIX PROFORMA NET INCOME Unaudited (Dollars in Millions) The following proforma net income has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Altra Transaction and related debt financing as if they had occurred on January 2, 2022, the first d
Slide 37: Pro Forma Adjusted EBITDA
4Q 2023 APPENDIX PRO FORMA ADJUSTED EBITDA Unaudited Three Months Ended December 31, 2022 (Dollars in Millions) Industrial Power Powertrain Efficiency Automation & Industrial Total Regal Solutions Solutions Motion Control Systems Rexnord Pro Forma Net Sales $ 651.6 $ 495.5 $ 431.4 $ 135.6 $ 1,714.1
Slide 38: Proforma GAAP Income From Operations
4Q 2023 APPENDIX PROFORMA GAAP INCOME FROM OPERATIONS Unaudited (Dollars in Millions) The following proforma income from operations has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Altra Transaction and related debt financing as if they had occurred on