Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Q3 2024 Earnings Presentation
30 slides from Regal Rexnord's earnings presentation, Nov 5, 2024
Slide 1: Third Quarter 2024 Earnings
Creating a better tomorrow™… Third Quarter 2024 Earnings November 5, 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: Forward Looking Statements and Non-GAAP Financial Measures
3Q 2024 FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES All statements in this communication, other than those relating to historical facts, are "forward-looking statements." Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “believe,” “con
Slide 3: Opening Comments & Overview; Results and Outlook; Q&A
1Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 3Q 2024 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 4: 3Q Performance
3Q 2024 3Q PERFORMANCE • Sales Down 2.7% On An Organic Basis* Adjusted Net Sales*+ Adjusted EBITDA* & Margin*+ o Cross Marketing Synergies Contributing • Daily Orders Up 2.5% $1,521.8 $1,477.4 $337.0 $330.0 • Record Adjusted GM* Of 38.4% 21.7% 22.8% o On Track To 40% Target Exiting 2025 3Q23 3Q24 3Q
Slide 5: Strong Momentum in Powertrain
3Q 2024 STRONG MOMENTUM IN POWERTRAIN Creating a better tomorrow™… 5 ©2024 Regal Rexnord Corporation, Proprietary and Confidential
Slide 6: Agenda: 3Q 2024 Results, 2024 Outlook
1Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 3Q 2024 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Moti on Co Indus Closing Remarks ntrol trial S LOUIS PINKHAM, CEO Solut ystem ions s
Slide 7: Automation & Motion Control
3Q 2024 AUTOMATION & MOTION CONTROL Sales Net Sales ($M) Adjusted EBITDA* ($M) & EBITDA • Organic Sales* Down 4.1% Margin* • Key Drivers $419.8 $401.6 o Discrete Automation (-) o Aerospace & Defense (+) o Food & Beverage (+) o Data Center (+) $100.4 $87.5 o Medical (+) 24.0% 21.8% 3Q23 3Q24 3Q23 3Q2
Slide 8: Industrial Powertrain Solutions
3Q 2024 INDUSTRIAL POWERTRAIN SOLUTIONS Sales Net Sales ($M) Adjusted EBITDA* • Organic Sales* Up 0.8% ($M) & EBITDA • Key Drivers Margin* $640.7 $644.2 o Energy (+) o Aerospace (+) o Metals & Mining (+) $53. $172.7 $235.2 5 o Alternative Energy (-) $138.9 $43. o Machinery/Off-Highway (-) 4 21.7% 26
Slide 9: Power Efficiency Solutions
3Q 2024 POWER EFFICIENCY SOLUTIONS Sales Net Sales ($M) Adjusted EBITDA* • Organic Sales* Down 6.2% ($M) & EBITDA • Key Drivers Margin* $461.3 o General Commercial (-) $431.6 $165. o Europe & Asia C-HVAC (-) 5 $39.0 o R-HVAC (+/-) $135. $90.7 o N.A. C-HVAC (+) 7 $76.8 $21.3 19.7% 17.8% 3Q23 3Q24 3Q2
Slide 10: Other Financial Updates
3Q 2024 OTHER FINANCIAL UPDATES Capital Expenditures Balance Sheet at September 30, 2024 • $29.3 Million in 3Q 2024 • Total Debt of $5,659.3 Million • Net Debt* of $5,198.9 Million • Net Debt*/Adj. EBITDA* of 3.61+ Effective Tax Rate (ETR) • Interest Coverage Ratio* of 3.63+ • 18.1% Adj. ETR* in 3Q
Slide 11: 2024 Outlook
3Q 2024 2024 OUTLOOK • Sales For 2024 Now Expected To Be ~$6.070 Billion • Adjusted EBITDA Margin* For 2024 Now Expected To Be ~22.0% • Now Expect 2024 Adjusted Diluted EPS* In A Range Of $9.15 - $9.45 (M/P $9.30) • Adjusted Free Cash Flow* Now Expected To Be ~$600 Million * Non-GAAP Financial Measu
Slide 12: Segment Outlook
3Q 2024 SEGMENT OUTLOOK * AMC and IPS sales growth targets are pro forma for the Altra transaction Creating a better tomorrow™… 12 ©2024 Regal Rexnord Corporation, Proprietary and Confidential
Slide 13: Initial Thoughts on 2025
3Q 2024 INITIAL THOUGHTS ON 2025 • Limited Sales Growth, Assuming Current Weaker End Markets With A Measured Pace of Recovery • ~$65 Million Additional Synergy Benefit • ~$50 Million Lower Interest Expense • Reversion To 24% Effective Tax Rate Earnings Growth Driven Mainly By Synergies & Debt Reduct
Slide 14: Agenda: Questions & Answers
1Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 3Q 2024 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: Closing Remarks
1Q 2021 Creating a better tomorrow™… Opening Comments & Overview LOUIS PINKHAM, CEO 3Q 2024 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
3Q 2024 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Unaudited Three Months Ended Nine Months Ended Sep 30, Sep 30, Sep 30, Sep 30, 2024 2023 2024 2023 GAAP Diluted Earnings (Loss) Per Share $ 1.09 $ (2.10) $ 2.32 $ (1.71) Intangible Amortization 0.98 0.99 2.95 2.53 (a) Restructuring and Related Cos
Slide 17: 2024 Adjusted Annual Guidance
3Q 2024 APPENDIX 2024 ADJUSTED ANNUAL GUIDANCE Unaudited Minimum Maximum 2024 GAAP Diluted EPS Annual Guidance $ 3.27 $ 3.57 Intangible Amortization 3.94 3.94 (a) Restructuring and Related Costs 0.82 0.82 Share-Based Compensation Expense 0.46 0.46 Operating Lease Asset Step Up 0.01 0.01 Impairments
Slide 18: 2024 Net Income to Adjusted EBITDA Annual Guidance
3Q 2024 APPENDIX 2024 NET INCOME TO ADJUSTED EBITDA ANNUAL GUIDANCE Unaudited (Dollars in Millions) Minimum Maximum Net Income $ 216.9 $ 236.2 Plus: Income Taxes 69.3 75.5 Plus: Interest Expense 394.2 394.2 Less: Interest Income (14.2) (14.2) Plus: Depreciation 166.0 166.0 Plus: Amortization 348.0 3
Slide 19: Adjusted EBITDA - Three Months Ended
3Q 2024 APPENDIX ADJUSTED EBITDA Unaudited (Dollars in Millions) Three Months Ended Industrial Powertrain Automation & Motion Solutions Power Efficiency Solutions Control Industrial Systems Total Regal Rexnord Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, 2024 2023
Slide 20: Adjusted EBITDA - Nine Months Ended
3Q 2024 APPENDIX ADJUSTED EBITDA Unaudited (Dollars in Millions) Nine Months Ended Industrial Powertrain Power and Efficiency Automation & Motion Solutions Solutions Control Industrial Systems Total Regal Rexnord Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, 2024 20
Slide 21: Net Income to Adjusted EBITDA
3Q 2024 APPENDIX NET INCOME TO ADJUSTED EBITDA Unaudited (Dollars in Millions) Three Months Ended Nine Months Ended Sep 30, 2024 Sep 30, 2023 Sep 30, 2024 Sep 30, 2023 Net Income (Loss) $ 73.0 $ (138.6) $ 156.4 $ (110.9) Plus: Income Taxes 8.4 12.7 53.2 34.9 Plus: Interest Expense 98.0 111.5 305.1 3
Slide 22: Adjusted Net Sales - Three Months
3Q 2024 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 Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, 2024 20
Slide 23: Adjusted Net Sales - Nine Months
3Q 2024 APPENDIX ADJUSTED NET SALES Unaudited (Dollars in Millions) Nine Months Ended Industrial Powertrain Power Efficiency Automation & Total Regal Solutions Solutions Motion Control Industrial Systems Rexnord Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, 2024 202
Slide 24: Adjusted Effective Tax Rate
3Q 2024 APPENDIX ADJUSTED EFFECTIVE TAX RATE Unaudited (Dollars in Millions) Three Months Ended Nine Months Ended Sep 30, 2024 Sep 30, 2023 Sep 30, 2024 Sep 30, 2023 Income (Loss) before Taxes $ 81.4 $ (125.9) $ 209.6 $ (76.0) Provision for Income Taxes 8.4 12.7 53.2 34.9 Effective Tax Rate 10.3 % (
Slide 25: Adjusted Free Cash Flow
3Q 2024 APPENDIX ADJUSTED FREE CASH FLOW Unaudited (Dollars in Millions) Three Months Ended Nine Months Ended Sep 30, Sep 30, Sep 30, Sep 30, 2024 2023 2024 2023 Net Cash Provided by Operating Activities $ 154.8 $ 186.7 $ 396.2 $ 514.0 Payments for Certain Acquisition Costs (Net of Tax of $11.4 Mill
Slide 26: Organic Sales Growth - Three Months
3Q 2024 APPENDIX ORGANIC SALES GROWTH Unaudited (Dollars in Millions) Three Months Ended Industrial Power and Powertrain Efficiency Automation & Industrial Total Regal Solutions Solutions Motion Control Systems Rexnord Net Sales Three Months Ended Sep 30, 2024 $ 644.2 $ 431.6 $ 401.6 $ — $ 1,477.4 I
Slide 27: Organic Sales Growth - Nine Months
3Q 2024 APPENDIX ORGANIC SALES GROWTH Unaudited (Dollars in Millions) Nine Months Ended Industrial Power and Powertrain Efficiency Automation & Industrial Total Regal Solutions Solutions Motion Control Systems Rexnord Net Sales Nine Months Ended Sep 30, 2024 $ 1,963.1 $ 1,227.8 $ 1,224.0 0 $ 157.8 $
Slide 28: Debt to EBITDA
3Q 2024 APPENDIX DEBT TO EBITDA Unaudited (Dollars in Millions) Last Twelve Months Sep 30, 2024 Net Income $ 213.0 Plus: Income Taxes 71.0 Plus: Interest Expense 412.8 (a) Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line
Slide 29: Adjusted Gross Margin - Three Months
3Q 2024 APPENDIX ADJUSTED GROSS MARGIN Unaudited (Dollars in Millions) Three Months Ended September 30, 2024 Industrial Power and Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales $ 644.2 $ 431.6 $ 401.6 $ — $ 1,477.4 Gross Margin
Slide 30: Adjusted Gross Margin - Nine Months
3Q 2024 APPENDIX ADJUSTED GROSS MARGIN Unaudited (Dollars in Millions) Nine Months Ended September 30, 2024 Industrial Power and Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales $ 1,963.1 $ 1,227.8 $ 1,224.0 $ 157.8 $ 4,572.7 Gros