Slide 1: Fourth Quarter and Fiscal Year 2012 Earnings Conference Call
Regal Beloit Corporation Fourth Quarter and Fiscal Year 2012 Earnings Conference Call February 5, 2013 Mark Gliebe Chairman and Chief Executive Officer Jon Schlemmer Chief Operating Officer Chuck Hinrichs Vice President Chief Financial Officer John Perino Vice President Investor Relations
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our management’s judgment regarding future events. In many cases, you can identify forward-looking statements by term
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 disclose adjusted diluted earnings per share (EPS), adjusted gross profit, adjusted gross profit as a percentage of net sales, adjusted income
Slide 4: Agenda
Agenda p 4 Opening Comments Mark Gliebe Financial Update Chuck Hinrichs Operations Update Jon Schlemmer Summary Mark Gliebe Q&A All Closing Comments Mark Gliebe
Slide 5: Opening Comments – 4th Quarter Results
Opening Comments – 4th Quarter Results In Line with Guidance – Reduction in ETR Offset Operational Challenges – North American Residential HVAC Sales Up Slightly – Unico Sales Grew 30% Highlights – Free Cash Flow* of 175% of Net Income –Continued Progress on Delivering Synergies Plant Rationali
Slide 6: Opening Comments
Opening Comments Cautiously Optimistic for 1Q 2013 –Normal Seasonal Order Rate Improvement – Improving Conditions in Many of our Markets Continue to Drive Synergies and Simplification; Expect to Conclude Juarez Restructuring during 1st Half 2013 Investing in Customer Care –New Facility in China
Slide 7: 4th Quarter 2012 Financial Highlights
4th Quarter 2012 Financial Highlights Results In Line with Guidance Sales Declined 1.6% from Prior Year – Sluggish International Sales –Currency Exchange Rates Reduced Sales by 0.3 % Adjusted Operating Profit Impacted by –Lower Volume and Manufacturing Cost Absorption – LIFO Benefit in Prior Ye
Slide 8: 4th Quarter 2012 Financial Highlights
4th Quarter 2012 Financial Highlights p 8 Restructuring Charges of $3.9 Million or $0.06 EPS – $3.6 million COGS, $0.3 million Operating Expenses Completed Tax Integration of EPC Acquisition 4th Quarter Earnings In Line with Guidance ADJUSTED DILUTED EARNINGS PER SHARE Dec 29, 2012 Dec 31, 2011
Slide 9: 4th Quarter 2012 Financial Highlights
Capital Expenditures $24.9 Million $1.6 Million Grants Received $91 Million for FY 2012 $100 Million for FY 2013 Effective Tax Rate (ETR) Completed EPC Tax Integration Provides Sustainable Benefits Free Cash Flow $52 Million FCF* in 4Q 2012 175% of Net Income in 4Q 2012 $269 Millio
Slide 10: 1st Quarter 2013 Guidance
1st Quarter 2013 Guidance GAAP EPS Guidance of $1.08 to $1.16 Adjusted EPS Guidance of $1.10 to $1.18, After Adding Back $0.04 of Restructuring Costs and Deducting $0.02 Tax Credit – Seasonally Higher Sales in 1st Quarter – Controlling Costs and Expenses – 23% Estimated ETR Includes Retroactive
Slide 11: 4th Quarter 2012 Operations Update
4th Quarter 2012 Operations Update Softer Market Conditions Continued into 4th Quarter N.A. Residential HVAC Up 0.2% N.A. Commercial and Industrial Motors Down 1.4% Sales Outside U.S. Down 1.5%, Representing 34.2% of Total Sales Unico Up 30% Driven Primarily by Oil and Gas and Automotive p
Slide 12: Synergies and Simplification
Synergies and Simplification Juarez Restructuring Synergies – Closing Four Manufacturing Facilities, Three Complete – On Track to Complete by Mid 2013 N.A. Warehouse Restructuring Synergies – Exited Three U.S. Warehouses – Now Complete Simplification Initiative – Additional Mexico Footprint Ra
Slide 13: Accelerating New Products
Accelerating New Products p 13 Energy Efficient 21% 4th Quarter Sales 50 60 2011 2012 New Product Launches
Slide 14: Gas Premix Blowers
Gas Premix Blowers Smart Air Moving Motor Technology Applications Include Boilers, Water Heaters, and Food Service Equipment Meets Low NOx Emissions Requirements Compact Design, Quiet Operation, High Efficiency p 14 Gas Premix 4.6
Slide 15: Large Frame Generators for China
Large Frame Generators for China Developed, Manufactured and Sold in China Low and Medium Voltage Designs Power Ratings up to 2,500 KW Utilizes Manufacturing Capabilities of the New Baoshan China Facility p 15 1000 Frame Generator
Slide 16: Summary
Summary p 16 4th Quarter Earnings in Line with Guidance Generating Strong Free Cash Flow Synergy and Simplification – On Track 1st Quarter – Typical Seasonal Order Improvements – Improving Conditions in Many of our Markets Acquisition Pipeline Strong
Slide 17: Questions and Answers
REGAL Questions and Answers
Slide 18: Closing Comments
Closing Comments p 18 2012 Represented Record Sales and Earnings Successful Integration of Largest Acquisition, Delivering the Synergies Successfully Transitioned Two Factories in China, Another Under Construction More New Products Launched in 2012 than Ever Before Improved Quality and Del
Slide 19: Appendix Non-GAAP Reconciliations
p 19 Appendix Non-GAAP Reconciliations
Slide 20: Free Cash Flow Reconciliation
p 20 Appendix Non-GAAP Reconciliations Free Cash Flow Reconciliation Dollars in Millions Dec 29, 2012 Dec 31, 2011 Dec 29, 2012 Dec 31, 2011 GAAP Net Cash Provided by Operating Activities 75.5$ 89.0$ 351.7$ 265.2$ Additions to Property Plant and Equipment (24.9) (13.3) (91.0) (57.6) Grants Received
Slide 21: EBITDA Reconciliation
Appendix Non-GAAP Reconciliations p 21 EBITDA Reconciliation Dollars in Millions 1Q 2012 2Q 2012 3Q 2012 4Q 2012 LTM Net Income $48.7 $62.7 $54.3 $29.9 195.6 Plus: Minority Interest 1.2 1.6 0.9 1.0 4.7 Plus: Taxes 17.8 28.2 17.9 5.7 69.6 Plus: Interest Expense 11.8 11.2 10.6 10.9 44.5 Less: Interest