Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Q2 2018 Earnings Presentation
24 slides from Regal Rexnord's earnings presentation, Aug 7, 2018
Slide 1: Second Quarter 2018 Earnings Conference Call
Regal Beloit Corporation Second Quarter 2018 Earnings Conference Call August 7, 2018 Mark Gliebe Jon Schlemmer Chairman and Chief Operating Officer Chief Executive Officer Rob Rehard Robert Cherry Vice President Vice President Chief Financial Officer Business Development & Investor Relations ©2018 R
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 and Opening Comments
Agenda and Opening Comments Opening Comments Mark Gliebe, CEO 2Q Results & 2018 Outlook Rob Rehard, CFO Operations Update Jon Schlemmer, COO Summary Mark Gliebe, CEO Q&A All 4
Slide 5: Opening Comments – 2nd Quarter Results
Opening Comments – 2nd Quarter Results Organic Sales Up 5.7% – Commercial & Industrial Systems Up 5.7% – Climate Solutions Up 2.4% – Power Transmission Solutions Up 10.4% Adjusted Operating Margin* Up 70 bps from Prior Year – Benefitted from Strong Volume, Incremental Price and Productivity – Co
Slide 6: Opening Comments – Looking Forward
Opening Comments – Looking Forward Encouraging Start to 3Q – Orders Up Versus Prior Year – Price/Cost Slightly Positive Expecting to Offset the Tariff Impacts Expecting Mid-Single Digit Organic Sales Growth in 2018 – Continued Growth in Residential & Light Commercial HVAC – Robust Commercial a
Slide 7: 2nd Quarter 2018 Financial Results
2nd Quarter 2018 Financial Results Prior Year Results Reflect Adoption of New U.S. GAAP Pension Accounting Rules 2Q 2018 Sales of $959.7 Million, Up 10.4% – Acquisitions Contributed 3.5% – Foreign Currency Translation of 1.3% – Organic Sales Up 5.7% Adjusted Operating Margin* of 11.1% – Up 70
Slide 8: 2nd Quarter 2018 Financial Results
2nd Quarter 2018 Financial Results ADJUSTED DILUTED EARNINGS PER SHARE * Three Months Ended Jun 30, Jul 1, 2018 2017 GAAP Diluted Earnings Per Share $ 1.50 $ 1.18 Restructuring and Related Costs 0.03 0.12 Purchase Accounting and Transaction Costs 0.08 — Gain on Sale of Assets (0.01) (0.01) Adjusted
Slide 9: 2nd Quarter 2018 Key Financial Metrics
2nd Quarter 2018 Key Financial Metrics Capital Expenditures Effective Tax Rate (ETR) $21.2 Million in 2Q 2018 21.4% ETR in 2Q 2018 $80.0 Million Expected in FY 2018 ~21.0% Expected in FY 2018 Restructuring and Related Costs $1.5 Million in 2Q 2018 $8.0 Million Expected in FY 2018 Balance
Slide 10: Exit of Resi Hermetic Motor Components Business
Exit of Resi Hermetic Motor Components Business Consistent with Strategy to Focus on the Core Plans Previously in Motion to Fix, Sell or Exit A Large Customer Announced on July 31, 2018 Intent to Wind Down Operations Due to a Loss of Business in the Middle East Business Reported in the Clima
Slide 11: 2018 Full Year Guidance
2018 Full Year Guidance Mid-Single Digit Organic Sales Growth in 2018 Improvement in 2018 Adjusted Operating Margin FY 2018 GAAP Diluted EPS Guidance of $4.78 to $5.08 FY 2018 Adjusted Diluted EPS* Guidance of $5.70 to $6.00 − Restructuring and Related Costs of $8.0 Million or $0.14 per Shar
Slide 12: U.S. Tariff Impacts
U.S. Tariff Impacts Section 232 – Most Steel Sourced from U.S. Suppliers – A Portion of Aluminum Sourced from Non-U.S. Suppliers – General Steel and Aluminum Inflation – Secondary Impact on Purchased Components Utilizing Imported Steel & Aluminum Section 301 – $50B List Includes Some Electric Mo
Slide 13: 2Q 2018 Commercial & Industrial Systems
2Q 2018 Commercial & Industrial Systems Adj. Income from Sales Sales Operations* ($ millions) Organic Sales Up 5.7% $36 Sales Performance $469 $407 $27 – Demand Up in Power Generation, Oil & Gas, Commercial HVAC and Pump – Demand Down in Pool Aftermarket, but Improving – Strong Demand in Asia an
Slide 14: 2Q 2018 Climate Solutions
2Q 2018 Climate Solutions Adj. Income from Sales Sales Operations* Organic Sales Up 2.4% ($ millions) Sales Performance $277 $45 $271 $41 – NA Resi HVAC Up Mid-Single Digit – Demand Down in Middle East – Resi Hermetic Down Mid-Teens Price Up from 1Q 2018 and Prior Year Adj. Operating Margin*
Slide 15: 2Q 2018 Power Transmission Solutions
2Q 2018 Power Transmission Solutions Adj. Income from Sales Sales Operations* ($ millions) Organic Sales Up 10.4% Sales Performance $213 – Strength in Material Handling, Food & $191 $25 Beverage, Oil & Gas and Aerospace $22 Price Up from Prior Year Adj. Operating Margin* 11.8% of Sales Up
Slide 16: 2nd Quarter 2018 Summary
2nd Quarter 2018 Summary Organic Sales Up 5.7% Price/Cost Slightly Positive Adjusted Operating Margin* Up 70 bps Adjusted Diluted EPS* Up 24% Free Cash Flow to Net Income of 122% Repurchased $46 Million of Shares New Share Purchase Authorization of $250 Million Orders Up Entering 3Q
Slide 17: Questions and Answers
Questions and Answers REGAL V7
Slide 18: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Six Months Ended Jun 30, Jul 1, Jun 30, Jul 1, 2018 2017 2018 2017 GAAP Diluted Earnings Per Share $ 1.50 $ 1.18 $ 2.81 $ 2.20 Restructuring and Related Costs 0.03 0.12 0.06 0.17 Purchase Accounting and Transact
Slide 19: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months Ended Commercial & Power Transmission ADJUSTED OPERATING INCOME Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Jun 30, Jul 1, Jun 30, Jul 1, Jun 30, Jul 1, Jun 30, Jul 1, 2018 2017 2018 2017 2018 2017 2018 2017 GAAP Inc
Slide 20: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations FREE CASH FLOW Three Months Ended Six Months Ended (Dollars in Millions) Jun 30, Jul 1, Jun 30, Jul 1, 2018 2017 2018 2017 Net Cash Provided by Operating Activities $ 101.8 $ 98.4 $ 144.3 $ 148.9 Additions to Property Plant and Equipment (21.2) (16.7) (40.5) (33.7)
Slide 21: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months Ended ORGANIC SALES GROWTH June 30, 2018 (Dollars in Millions) Commercial & Power Industrial Climate Transmission Systems Solutions Solutions Total Regal Net Sales $ 469.0 $ 277.3 $ 213.4 $ 959.7 Net Sales from Business Acquired (30.1) - - (30.1) Impact
Slide 22: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations TOTAL GROSS DEBT/ADJUSTED EBITDA TOTAL NET DEBT/ADJUSTED EBITDA (Dollars in Millions) (Dollars in Millions) LTM Jun 30, LTM Jun 30, 2018 2018 Net Income Attributable to Regal Beloit Corporation $ 238.0 Net Income Attributable to Regal Beloit Corporation $ 238.0 Plus
Slide 23: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Quarter-to-Date Year-to-Date Commercial & Power Commercial & Power Industrial Transmission Industrial Transmission RECONCILIATION FOR PENSION ADJUSTMENT Systems Climate Solutions Solutions Total Regal Systems Climate Solutions Solutions Total Regal (Dollars in Milli
Slide 24: 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