Slide 1: Regal Beloit Corporation Investor Relations Presentation
Regal Beloit Corporation Investor Relations Presentation August 2016 Mark Gliebe Chuck Hinrichs Chairman Vice President Chief Executive Officer Chief Financial Officer Jon Schlemmer Robert Cherry Chief Operating Officer 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 periodically disclose certain financial measures in our quarterly earnings releases, on investor conference calls, and in investor presentati
Slide 4: Regal is…
Regal is… A Recognized Leader in High Efficiency Motor Solutions − Well positioned for global energy efficiency trend A Portfolio of Established and Highly Respected Industrial Brands − Large installed base drives recurring revenue A Successful Acquirer and Integrator − PTS integration on trac
Slide 5: Regal Overview
Regal Overview Sales by Product/Platform Sales by Segment Founded in 1955 with Other Power Drives Climate Headquarters in Couplings Transmission Solutions Generators Solutions Beloit, Wisconsin 22% Blowers Small 30% Motors Bearings 2015 Sales of $3.5B 48% Gearing Large Motors Commercial & Industrial
Slide 6: Business Segments and Brands
Business Segments and Brands Oil & Gas Power General Generation Industry Commercial & Industrial Pump Systems Comm. Distribution HVAC Water Heating General Industry Resi. & Climate Comm. Light Comm. Ref. Solutions HVAC Aftermarket Other HVAC Power Oil & Gas General Industry Transmission Solutions Me
Slide 7: Financial Snapshot
Financial Snapshot Net Sales Adjusted Diluted EPS* (billions) $3.5 $5.33 $4.36 $4.31 $3.3 $3.1 2013 2014 2015 2013 2014 2015 Free Cash Flow* Dividends Per Share (millions) $289 $0.90 $224 $215 $0.84 $0.78 2013 2014 2015 2013 2014 2015 * Non-GAAP Financial Measurement, See Appendix for Reconciliation
Slide 8: Residential, Commercial & Industrial Motor Systems
Residential, Commercial & Industrial Motor Systems Residential Applications Commercial Building Applications Motors Consume ~45% of Global Electricity Production 8
Slide 9: Efficiency Requirements Increasing
Efficiency Requirements Increasing Future Efficiency Regulations for: Efficiency Regulations for: - Large Pumps - Estimate for Amendment 14 - Pool Pumps, Fountain Pumps Efficiency Regulations for: - Commercial Refrigeration - Special Motors and VFD - IE3 Efficiency Level Required - Small Motor
Slide 10: High Efficiency Product Innovation
High Efficiency Product Innovation Standard ® DEC Star® Energy Efficient Air Mover with Axial Motor Replaces ECM Motors and Standard Efficiency Blowers Regal Offering Expanded from Just Motor to Entire Blower Assembly Smaller, Lighter, Quieter 14% Better Efficiency Residential Applications R
Slide 11: High Efficiency Product Innovation
High Efficiency Product Innovation Standard Air Handling Axial Air Handling Integrated Axial ECM Platform for Larger Power Applications Regal Offering Expanded from Just Motor to Compact Motor with Integrated Drive Reduced System Size and Weight Increased System Efficiency and Serviceability
Slide 12: PTS Established Brand Portfolio
PTS Established Brand Portfolio Category Brands Est. Installed Base Key Products BEARINGS $1,740M Cam Follower Mounted Bearing GEARING $1,250M Shaft Reducer Worm Gearing COUPLINGS $1,000M Disc Couplings Gear Coupling COMPONENTS CONVEYING $525M Chain Guide Conveyor Chain $125M V-Belt Drive TorqGard™
Slide 13: PTS Integration On Track
PTS Integration On Track Integration of Regal's Largest and Most Complex Acquisition now Essentially Complete Delivered $12 Million of Year One Synergies Versus Target of $7 Million Forecasting $30 Million in Total Synergies Over a Three-Year Period Versus Original Four-Year Plan Another Succe
Slide 14: Simplification in Full Stride
Simplification in Full Stride Advantages Current 56 Frame Platforms Optimum Design Features Best Manufacturing Processes Standardized Components Century Marathon Marathon CAC Consolidated Supply Chain Enables Automation Maintains Brand Differences Next Generation Regal Platform Over 5,00
Slide 15: Simplifying Our Footprint
Simplifying Our Footprint Rooftop Square Feet* (000s) 10,000 9,000 8,000 7,000 2011 2012 2013 2014 2015 2016 Rooftop Consolidation Drives Margin Improvement * Does not include 2015 PTS acquisition 15
Slide 16: Consistently Generating Cash
Consistently Generating Cash Free Cash Flow* % of Adj. Net Income* (millions) $350 150% $300 120% $250 90% $200 $150 60% $100 30% $50 $- 0% 2011 2012 2013 2014 2015 2016e** Consistently Delivering Strong FCF – 129% Annual Average * Non-GAAP Financial Measurement, See Appendix for Reconciliation 16 *
Slide 17: Managing Debt to Drive Growth
Managing Debt to Drive Growth Total Debt / Total Capital 60% Power Transmission 50% 40% 30% 20% 10% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 12-Year Record of Using Free Cash Flow to Reduce Debt 17
Slide 18: Returning Cash to Shareholders
Returning Cash to Shareholders Dividends Per Share Paid $0.90 $0.84 $0.78 55 Consecutive Years of $0.74 $0.70 Cash Dividends $0.66 $0.64 $0.62 Dividend Increased 11 of $0.58 the Last 12 Years Opportunistic Share Repurchases 2007 2008 2009 2010 2011 2012 2013 2014 2015 Consistent Increase in Ca
Slide 19: 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: 18% – 22% Payout Ratio Acquisitions Share Repurchase Target Accretive Bolt-on and Utilize Remaining Share Repurchase Transformative Transactions to Drive
Slide 20: Key Takeaways
Key Takeaways Regal is… A Recognized Leader in High Efficiency Motor Solutions A Portfolio of Established and Highly Respected Industrial Brands A Successful Acquirer and Integrator Ahead of Industry Curve on Simplification Initiative A Strong Free Cash Flow Generator A Stable Business w
Slide 21: Thank You
Mark J Gliebe Chairman Chief Executive Officer Thank You Jon Schlemmer Chief Operating Officer Chuck Hinrichs Vice President Chief Financial Officer Robert Cherry Vice President Investor Relations Mark Gliebe Chuck Hinrichs Chairman Vice President Chief Executive Officer Chief Financial Officer Jon
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 23: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Twelve Months Ended Jan 2, Jan 3, Jan 2, Jan 3, 2016 2015 2016 2015 GAAP Diluted Earnings Per Share $ (0.43) $ (2.61) $ 3.18 $ 0.69 Goodwill Impairment 1 1.30 2.60 1.29 2.59 Other Impairments, Net - 0.67 - 0.66
Slide 24: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations Three Months Ended Commercial & Industrial Power Transmission ADJUSTED INCOME FROM OPERATIONS Systems Climate Solutions Solutions Total Regal Jan 2, Jan 3, Jan 2, Jan 3, Jan 2, Jan 3, Jan 2, Jan 3, 2016 2015 2016 2015 2016 2015 2016 2015 Dollars in Millions GAAP Inc
Slide 25: Appendix Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations ADJUSTED NET INCOME Fiscal Years Dollars in Millions 2011 2012 2013 2014 2015 2016 (E) GAAP Net Income Attributable to Regal Beloit Corporation $ 152.3 $ 195.6 $ 120.0 $ 31.0 $ 143.3 $ 200.0 Goodwill and Asset Impairments and Other $ — $ — $ 81.0 $ 159.5 $ 92.7 $ —
Slide 26: 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 Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31 Fiscal Years 2015 and 2016 have 52 weeks Fiscal Year 2014 had 53 weeks 26