Regal Rexnord Corporation · NYSE:RRX

Regal Rexnord — Regal Beloit — Investor Presentation (November 2017)

32 slides from Regal Rexnord's investor presentation, November 2017

  1. Slide 1: Regal Beloit Corporation Investor Relations Presentation

    Regal Beloit Corporation Investor Relations Presentation November 2017 Mark Gliebe Chuck Hinrichs Chairman Vice President Chief Executive Officer Chief Financial Officer Jon Schlemmer Robert Cherry Chief Operating Officer Vice President Business Development & Investor Relations ©2017 Regal Beloit Co

  2. Slide 2: Safe Harbor Statement

    Safe Harbor Statement November 2017 ©2017 Regal Beloit Corporation 2

  3. Slide 3: Non-GAAP Financial Measures

    Non-GAAP Financial Measures November 2017 ©2017 Regal Beloit Corporation 3

  4. Slide 4: Regal is…

    Regal is…  A Leader in High Efficiency Motor & Power Transmission Systems − Well-positioned for global energy efficiency trend  A Strong Free Cash Flow Generator − Five-year average free cash flow 138% of adjusted net income*  Positioned to Drive Organic Growth through Innovation − Disruptive pro

  5. Slide 5: Regal Overview

    Regal Overview Sales by Product Sales by Segment Other Power Founded in 1955 with Couplings Transmission Climate Headquarters in Bearings Solutions Solutions Beloit, Wisconsin 23% 30% Gearing Fractional HP Motors Drives Generators 47% 2016 Sales of $3.2B Integral HP Motors Blowers Commercial & Indus

  6. Slide 6: Segment End Markets, Products and Brands

    Segment End Markets, Products and Brands Commercial & Industrial Systems Climate Solutions Power Transmission Solutions ® November 2017 ©2017 Regal Beloit Corporation 6

  7. Slide 7: Financial Snapshot

    Financial Snapshot Net Sales Adjusted Diluted EPS* (billions) $5.33 $3.5 $3.3 $3.2 $4.36 $4.44 $3.1 $4.31 2013 2014 2015 2016 2013 2014 2015 2016 Free Cash Flow* Dividends Per Share (millions) $374 $0.90 $0.94 $0.84 $0.78 $289 $224 $215 2013 2014 2015 2016 2013 2014 2015 2016 * Non-GAAP Financial Me

  8. Slide 8: Consistently Generating Cash

    Consistently Generating Cash (millions) $500 200% 175% $400 150% 125% $300 100% $200 75% 50% $100 25% $- 0% 2012 2013 2014 2015 2016 Free Cash Flow* % of Adj. Net Income* Free Cash Flow % of Adj. Net Income 5-Year Average of 138% * Non-GAAP Financial Measurement, See Appendix for Reconciliation Nove

  9. Slide 9: Returning Cash to Shareholders

    Returning Cash to Shareholders Dividends Per Share Paid $0.94 $0.90 $0.84 $0.78 $0.74 $0.70 $0.66 $0.64 $0.62 $0.58 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Dividend Increase of 8% Announced May 1, 2017 November 2017 ©2017 Regal Beloit Corporation 9

  10. Slide 10: Capital Allocation Priorities

    Capital Allocation Priorities Balance Sheet Targets  Debt/EBITDA* Ratio: 1.5 – 3.5  Capital Expenditures: 2.5% – 3.0% of Sales  Cash Dividends: 20% – 24% Payout Ratio Acquisitions Share Repurchase Targeted Transactions to Strengthen the Opportunistically Repurchase Shares while Core and Drive Sha

  11. Slide 11: Enterprise Strategy

    Enterprise Strategy CORE CAPABILITIES FOUNDATIONAL PERFORMANCE Top Quartile Unique Culture Cash Generation KEY ELEMENTS Strong • Focus on Core Improving Operators • Innovate to Grow Margins • Simplification Innovative Customer Favored Drives Long Term Growth and Improved Returns November 2017 ©2017

  12. Slide 12: Enterprise Strategy – Performance Targets

    Enterprise Strategy – Performance Targets Organic Sales Adj. Operating ROIC* Free Cash Flow Growth* Margins* to Net Income* 2% – 4% CAGR 200 – 250 bps 300 – 400 bps 100% – 125% By 2019 Strategy Drives Sustainable Improvements in Financial Performance * Non-GAAP Financial Measurement, See Appendix fo

  13. Slide 13: Focus on the Core

    Focus on the Core  Acquisition First  Organic First to  Serial Acquirer  Targeted Acquisitions  Focus On Core Businesses Where We Can Differentiate with Technology  Increase the Focus on the Distribution Channel to Drive Growth  Selectively Prune Businesses Where We Do Not Have a Clear Advant

  14. Slide 14: Innovate to Grow

    Innovate to Grow Disruptive Energy Efficiency Internet of Things Technology Commercial Refrigeration HP Range Year Markets  Efficient motors use electronics  Effective March of 2017 < 1.0 2011 Furnaces  Every motor can be a sensor  Requires ECM type motor Boilers  Every motor can communicate Ap

  15. Slide 15: Energy Efficiency Requirements Increasing

    Energy Efficiency Requirements Increasing Comm. Ref. Commercial Fan Energy Equipment HVAC Rating (FER) 2017 2018 2019 2020 IE3 Efficiency Walk in Coolers Industrial Motors & Freezers Multi-Year Trend Favors High Efficiency Suppliers November 2017 ©2017 Regal Beloit Corporation 15

  16. Slide 16: Furnace Fan Regulation Impact

    Furnace Fan Regulation Impact Industry Units by Motor Type (million units) 3.1 2.9  Fan Energy Rating (FER)  New National Furnace Standard High Eff  Electrical Efficiency Requirement Standard  High Efficiency Motor Mandate  7/1/19 Effective Date 2016 2020 Significant Industry Mix Shift by 2020

  17. Slide 17: Four Paths To Meet FER Regulation

    Four Paths To Meet FER Regulation 100% Heat Exchanger 93% Gas Modulation 82% Blower Housing 70% Blower Motor % of Volume November 2017 ©2017 Regal Beloit Corporation 17

  18. Slide 18: Full Range of FER Solutions

    Full Range of FER Solutions DEC Star® Blower Highest Efficiency Customer Benefits Solution  Full Range of Solutions  Highest Motor Efficiency ECM 3.0+ with Proven Reliability High Efficiency Motor  Premium Solution for Most Difficult Applications Ensite™ ECM Motor Regal Benefits  Full Customer E

  19. Slide 19: Disruptive Technology – DEC Star Blower

    Disruptive Technology – DEC Star® Blower Standard Blower DEC Star® Blower Innovative Benefits  First to Market  Substantial Improvement  New Technology in the Motor, in Energy Efficiency Drive, Blower Construction  Less Noise and Blower Wheel  Less Weight  17 Patents Issued & Pending  Uniform

  20. Slide 20: Scaling Axial Technology

    Scaling Axial Technology Axial Axial DEC Star® Blower UlteMAX™ Draft Inducer Gas Pre-Mix HVAC Solution Motor & Control 2011 2013 2015 2017 Growth Opportunities in Both Existing and New Markets for Regal November 2017 ©2017 Regal Beloit Corporation 20

  21. Slide 21: Disruptive Technology – UlteMAX Motor

    Disruptive Technology – UlteMAX™ Motor Customer Benefits Standard UlteMAX™ Industrial Motor Motor & Control  Compact Form Factor  50% – 75% Lower Weight  Higher Efficiency Regal Benefits  Significant Customer Interest  Sales Begin in 2017  Est. $70 Million Incremental Sales by 2023 Differentia

  22. Slide 22: UlteMAX Motor – Industrial Applications

    UlteMAX™ Motor – Industrial Applications Standard Air Handling Axial Air Handling Innovative Benefits to Customers  First to Market  Substantial Improvement in  Revolutionary Form Factor Energy Efficiency  New Technology in the Motor, Drive  50% - 75% Less Weight and Size  8 Patents Issued and

  23. Slide 23: Simplification

    Simplification Completed thru 2016 Planned for 2017-2019 75% of Sales on One ERP ERPs 90% of Sales on One ERP 1,845,000 sq ft Reduced Another 1,100,000 sq ft 15% Reduction Manufacturing Footprint Cumulative 25% Reduction 4 Major Design Platforms 1 Additional Design Platform Consolidated Design Platf

  24. Slide 24: Leveraging Simplification

    Leveraging Simplification Rooftop Consolidation Automation 1,845K Enables sq ft consolidated ERP Consolidation Digital Customer Experience 75% Enables revenue on one system Platform Consolidation Innovation  Energy Efficiency 4 Enables  Disruptive Technology  Internet of Things design platforms e

  25. Slide 25: Key Takeaways

    Key Takeaways Regal is…  A Leader in High Efficiency Motor & Power Transmission Systems  A Strong Free Cash Flow Generator  Positioned to Drive Organic Growth through Innovation  Delivering Results from Ongoing Simplification Initiative We Create a Better Tomorrow by Efficiently Converting Power

  26. Slide 26: Thank You

    Thank You Mark Gliebe Chuck Hinrichs Chairman Vice President Chief Executive Officer Chief Financial Officer Jon Schlemmer Robert Cherry Chief Operating Officer Vice President Business Development & Investor Relations ©2017 Regal Beloit Corporation

  27. Slide 27: Appendix Non-GAAP Reconciliations

    Appendix Non-GAAP Reconciliations (Dollars in Millions) Twelve Months Ended FREE CASH FLOW Dec 29, 2012 Dec 28, 2013 Jan 3, 2015 Jan 2, 2016 Dec 31, 2016 Net Cash Provided by Operating Activities $ 351.7 $ 305.0 $ 298.2 $ 381.1 $ 439.6 Additions to Property Plant and Equipment (91.0) (82.7) (83.6) (

  28. Slide 28: Appendix Non-GAAP Reconciliations

    Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE Twelve Months Ended Dec 31, Jan 2, 2016 2016 GAAP Diluted Earnings (Loss) Per Share $ 4.52 $ 3.18 Goodwill Impairment - 1.29 Venezuelan Asset Write Down - 0.28 Restructuring and Related Costs 0.10 0.13 Gain on Sale of Assets (0.04

  29. Slide 29: Appendix Non-GAAP Reconciliations

    Appendix Non-GAAP Reconciliations EBIT AND EBITDA RECONCILIATION (Dollars In Millions) Fiscal 2016 Income From Operations $ 320.6 Plus: Goodwill Impairment - Plus: Asset Impairment and Other Net, - Plus: Restructuring and Related Costs 6.8 Plus: Purchase Accounting and Transaction Costs - Plus: Vene

  30. Slide 30: Appendix Non-GAAP Reconciliations

    Appendix Non-GAAP Reconciliations ORGANIC GROWTH (Dollars in Millions) Fiscal 2016 Net Sales $ 3,224.5 Net Sales from Businesses Acquired (35.9) Net Sales from Businesses Divested 11.6 Impact from Foreign Currency Exchange Rates 31.2 Adjusted Net Sales $ 3,231.4 Net Sales Ended Jan 2, 2016 $ 3,509.7

  31. Slide 31: Appendix Non-GAAP Reconciliations

    Appendix Non-GAAP Reconciliations RETURN ON INVESTED CAPITAL (ROIC) RECONCILIATION (Data in Millions) Fiscal 2015 Fiscal 2016 Cash $ (253) $ (285) Current Maturities of Long Term Debt 6 101 Long Term Debt 1,716 1,311 Total Net Debt $ 1,469 $ 1,127 Total Regal Beloit Corporation Shareholders' Equity

  32. Slide 32: Appendix 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  Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31  Fiscal Years 2015, 2016, 2017 and 2018 have 52 weeks  Fis

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