Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Investor Day (September 2024)
114 slides from Regal Rexnord's investor day presentation, Sep 17, 2024
Slide 1: Investor Day 2024
INVESTOR DAY 2024 INVESTOR DAY 2024
Slide 2: Agenda
Agenda 8:30 a.m. Welcome Rob Barry, VP Investor Relations 8:35 a.m. Company Overview & Strategy Louis Pinkham, Chief Executive Officer 9:15 a.m. The Power Transmission Leader, Positioned for Higher Growth Jerry Morton, EVP & President of IPS 10:00 a.m. Break 10:10 a.m. A New Product Driven Growth St
Slide 3: Forward Looking Statements and Non-GAAP Financial Measures
Forward Looking Statements and Non-GAAP Financial Measures All statements in these presentations, 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,” “confident,
Slide 4: Company Overview & Strategy
Company Overview & Strategy Louis V. Pinkham Chief Executive Officer INVESTOR DAY 2024
Slide 5: A Powerful Enterprise
Positioned for Differentiated Value Creation A Powerful Organic Sales Out-Growth Poised to Accelerate Enterprise Expect increasingly consistent above-market organic growth by harnessing the power of our transformed portfolio and go-to-market High Secular Exposures Tracking to Top Quartile Margins Te
Slide 6: Transformation Across All Key Metrics
Transformation Across All Key Metrics 2018 From To 2023 ~$4B Enterprise Value ~$16B 7 - 9x EV/EBITDA Multiple 10 - 12x 77% 29% 28% $3.6B Adj. Net Sales* ~$6.2B2 ~24% Customer Concentration1 ~11% ~27% Adj. Gross Margin* ~36%2 ~15% Adj. EBITDA Margin* ~22%2 23% $285M Adj. Free Cash Flow* ~$683M 43% *
Slide 7: Repositioned for Top Quartile Performance
Repositioned for Top Quartile Performance 2018 & Prior Today & Going Forward Org Centralized Operating Structure Decentralized - 14 Business Units Led by P&L Owners Structure Global Operating Footprint of ~11M+ sq. ft. Down ~18% (2024E), Further reduction >15% (2027E) Simplification SKU Proliferatio
Slide 8: Regal Rexnord Snapshot
Regal Rexnord Snapshot (NYSE: RRX) POWER EFFICIENCY 1 1 SOLUTIONS (PES) Milwaukee, WI ~30,000 >250 Headquarters Associates Worldwide Global Sites Power Motion ~$6.2B ~36% ~22% $683M High Efficiency Electric Motors & 1 1 1 Air Moving Solutions Total Revenue Adj. Gross Margin* Adj. EBITDA Margin* Adj.
Slide 9: A Disciplined Leadership Team Focused on Execution
Presenting Today A Disciplined Leadership Team Focused on Execution Louis V. Pinkham Rob Rehard Cheryl Lewis Hugo Dubovoy Tim Dickson Justin Baier Chief Executive EVP, Chief EVP, Chief Human EVP, Corporate Secretary, SVP, Chief Digital SVP, Business Development Officer Financial Officer Resources Of
Slide 10: Guided by Our Values
Guided by Our Values Integrity Innovation With Purpose Zero-tolerance policy on unethical behavior. We innovate to develop products that are We value integrity most. We are honest, valued by our customer and bring profitable transparent, and trustworthy in all situations. growth for Regal Rexnord. R
Slide 11: Our Team Is Highly Engaged
Our Team Is Highly Engaged Engagement Survey Conducted in Fall 2023 8 Survey Categories Inclusion Individual Goals 96% Understand how their work contributes Above manufacturing norm of 91% Customer Focus Innovation 96% Feel accountable for their work Regal Rexnord specific metric Engagement Leadersh
Slide 12: Disciplined Operating Model
Disciplined Operating Model Stakeholder Success Customer Focus Associate Engagement Maximize Shareholder Value 12 INVESTOR DAY 2024
Slide 13: A Clear Purpose
A Clear Purpose WE CREATE A BETTER TOMORROW With Sustainable Solutions That Power, Transmit, and Control Motion. 13 INVESTOR DAY 2024
Slide 14: Sustainability and Strategy Are Intertwined
Sustainability and Strategy Are Intertwined Growth Impact ~60% Of Our Product Offering Directly Or Addressing rising Intend to achieve carbon Indirectly Supports Making End User E demand for more neutrality (scopes 1 & 2) by Applications More Environmentally Friendly sustainable 2032, with a 15.5% a
Slide 15: We Benefit From Sustainable Competitive Advantages
We Benefit From Sustainable Competitive Advantages Flexible, Global Portfolio Breadth & Scale Scale & Scope of GTM Manufacturing Footprint Secular Market Exposure Brands – Differentiated Deep Domain Expertise Product & Technology 15 INVESTOR DAY 2024
Slide 16: RRX Growth Algorithm: Evolving as a Growth Compounder
RRX Growth Algorithm: Evolving as a Growth Compounder Target High Growth Markets Growth investments aligned to secular and mega trends Solution Selling Moving up the value chain from components Raise Business Durability Strategies to reduce cyclicality Leverage Unrivaled Scale & Scope Our transforme
Slide 17: Clear Plans to Accelerate Portfolio Wide Organic Growth
Clear Plans to Accelerate Portfolio Wide Organic Growth 2019-2023 Mid-Cycle Segment Organic Growth1 Growth Target Key Drivers of Growth Outlook Innovation investments & rising vitality AMC • ~4.4% 6% • Secular tailwinds • Go-to-market scale & scope IPS ~2.5% 4% • Portfolio scale & scope • Digital in
Slide 18: Strong Secular End Market Exposure
Strong Secular End Market Exposure Discrete Automation Alternative Energy ~13% - Labor Shortages ~3% - Regulatory Requirements Sales By End Market of sales1 - Labor Inflation - Shift From Fossil Fuels Data Center 2% Pool 2% Medical 3% Alt Energy 3% General Aerospace Industrial 22% Residential HVAC M
Slide 19: Mega Trends Suggest >$2.6T Market Opportunity
Mega Trends Suggest >$2.6T Market Opportunity Regulation Digitalization Automation Electrification Aging Population $1.5T+ $500B+ $400B+ $200B+ $40B+ Motor Efficiency IoT, digital, and AI Labor inflation and Shift to cleaner energy Medical innovations in Standards driving connected scarcity sources
Slide 20: Secular Tailwinds Benefit All Segments
Secular Tailwinds Benefit All Segments Target Mid- Secular Exposure Segment Cycle Growth Rate Food & Discrete Data Alt. Beverage Auto. R-HVAC Aero Center Energy Medical Pool Total AMC ~6% 20% 30% - 20% 6% - 10% - 86% IPS ~4% 4% 10% - 1% - 6% 1% - 22% PES ~3% 4% - 33% - 3% - - 8% 48% Market Volume (3
Slide 21: Increasing Mix of Solutions
Increasing Mix of Solutions Customer Value Proposition 7th Axis Collaborative Industrial Powertrains Robot Solutions • Full engineering support accelerates customer program timelines • Optimized system performance enhances efficiency and reliability • Offer customers a convenient and accountable par
Slide 22: Improving Business Durability
Improving Business Durability Select Enhancement Initiatives Project Management & Equipment Lifecycle Services AMC RD&E Directed to Secular Durability Drivers 1 Markets • ~40% Aftermarket & Services • ~50% Secular Markets Reliability & MRO Solutions • Balanced Early / Mid / Late IPS Targeted First-F
Slide 23: Go to Market Scale & Scope
Go to Market Scale & Scope ~2,000 Global Sales Professionals Attractive Segment Verticals Aerospace Discrete Automation AMC Food & Beverage Critical Power Medical Metals & Mining Machinery / Off-Highway IPS Energy / Alt Energy Food & Beverage Marine HVAC Clean Room PES Data Center Pool Driving Globa
Slide 24: Next Stage in Our Transformation Journey
Next Stage in Our Transformation Journey 2023 From To 2027E ~$6.2B1 Adj. Net Sales* ~$6.4 to ~$7.0B 29% 28% 28% 30% 2 ~2.2% Sales CAGR 2 – 5% (’19 – ’23) (’24E – ’27E) ~36%1 Adj. Gross Margin* ~40% 43% ~22%1 Adj. EBITDA Margin* ~25% 42% Automation & Motion Control (AMC) Power Transmission (IPS) Moto
Slide 25: The Power Transmission Leader, Positioned for Higher Growth
The Power Transmission Leader, Positioned for Higher Growth Jerry Morton EVP & President, Industrial Powertrain Solutions INVESTOR DAY 2024
Slide 26: Industrial Powertrain Solutions (IPS) Snapshot
Industrial Powertrain Solutions (IPS) Snapshot Key Products Financials (2023) IoT ~$2.6B Gearing Couplings Bearings Clutches & Brakes Industrial Powertrains 1% Sales1 7% 4% 4% 7% 6% 24% ~37% 6% Sales By 19% Sales By Channel 50% 50% 10% End Geography Mix Adj Gross Margin* Market 67% 10% 24% ~24% 11%
Slide 27: IPS Competitive Advantages
IPS Competitive Advantages 3-Year Financial Targets (2024 – 2027E) • Broadest power transmission offering Scale & • Complete components & solutions provider Scope • Extensive global reach 2 – 5% • Time-proven brands Sales Growth CAGR Trusted • Substantial installed base Brands • Durable, high-margin
Slide 28: IPS Business Transformation
IPS Business Transformation 2018 Today1 Legacy Power Transmission Regal PTS Leader Poised to Grow ~$0.8B Revenue ~$2.6B Revenue ~33% Adj. Gross Margin* ~41% Adj. Gross Margin* ~19% Adj. EBITDA Margin* ~26% Adj. EBITDA Margin* 350 Sales Professionals 1,200 Sales Professionals 180 Engineering/Tech Pro
Slide 29: IPS Growth Strategy
IPS Growth Strategy Target High Growth Markets Growth investments aligned to secular and mega trends Solution Selling Moving up the value chain from components © 2024 Regal Rexnord Corporation Raise Business Durability Strategies to reduce cyclicality Leverage Unrivaled Scale & Scope Our transformed
Slide 30: Distinctive Scale, Unrivaled Scope
Distinctive Scale, Unrivaled Scope Scale & IPS Has Unmatched Capabilities Across the Industrial Powertrain Scope Power Transmission Competitors1 RRX Rank IPS A B C D E F TOP Gearing 3 TOP Bearings 3 Couplings 1 Clutches & Brakes 1 TOP Digital / IoT 3 Premium TOP Efficiency Motors 3 30 INVESTOR DAY 2
Slide 31: Our Go-To-Market Is a Competitive Advantage
Our Go-To-Market Is a Competitive Advantage Scale & Scope EMEA 140+ Sales 160+ Customer Care North America 19 Manufacturing Sites 250+ Sales Unique commercial scale & reach 220+ Customer Care 24 Manufacturing Sites APAC Application & end market focused 100+ Sales 50+ Customer Care 7 Manufacturing Si
Slide 32: Customer Spend Consolidation Is a Significant Win-Win Opportunity
Customer Spend Consolidation Is a Significant Win-Win Opportunity Scale & Scope Customer Value Prop Buy 2+ Categories ~15% ~20% +$160M ✓ One Stop Shop Revenue ✓ Trusted Brands +$1B ✓ Single Purchase Order Buy 1 Category Aftermarket RRX Enablers Potential ✓ Broad Scope of Offering ✓ Deep Application
Slide 33: Case Study | Cross-Selling Momentum
Case Study | Cross-Selling Momentum Scale & Scope Cooling System OEM Spend Consolidation Cooling Tower Skidded Altra Powertrain (PT) Solution Bearings Motors Rexnord Gearing Couplings 2017 2018 2019 2020 2021 2022 2023 2024E % PT 15% 15% 15% 20% 25% 50% 60% 90%+ Component Supplier Bundled Package Op
Slide 34: Powertrain | The Ultimate Cross-Sell Value Prop
Powertrain | The Ultimate Cross-Sell Value Prop Solution Selling From: Procuring To: Providing the Integrated Solution Individual Components • Full engineering support accelerates customer program timelines • Optimized system performance enhances efficiency and reliability • Provides customers a con
Slide 35: Case Study | Powertrain Solution for Hull Inspection and Cleaning System
Case Study | Powertrain Solution for Hull Inspection and Cleaning System Solution Selling Legacy, Customer-Assembled Hull Inspection & Cleaning RRX-Optimized Powertrain Solution Winch Subsystem System OEM Servo-gearmotor with embedded braking & control functionality Induction Brake Motor Belt Drive
Slide 36: Targeting Higher Growth Verticals
Targeting Higher Growth Verticals High Growth Industries 3Y CAGR Market Drivers / Megatrends Appeal For RRX • Infrastructure Investment High Cost of Downtime = RRX Reliability Premium Metals & Mining MSD • Electrification & Role for Perceptiv® Technologies • Urbanization Shorter Useful Life = High A
Slide 37: Innovating in Powertrain Electrification
Innovating in Powertrain Electrification High Growth Fork-Lift Truck & AGVs Compact Construction Domain Expertise Across a Wide Range of Applications in Key End Markets Turf & Garden Farm & Agriculture Scale & Scope of Engineering Expertise to Develop and Optimize Electrified Powertrains Tailored &
Slide 38: Maximizing Aftermarket Opportunity
Maximizing Aftermarket Opportunity Durability Grow Installed Base Capture the OEM First Fit Mix Shift Over 3 Years with Targeted OEMs Aftermarket Potential • Vertical market focus • Aftermarket revenue ~6x the initial OEM 47% sale over life of 47% • Applications expertise 53% 53% application • Solut
Slide 39: Sales Strategy Focus: 80/20, Scale & Scope
Sales Strategy Focus: 80/20, Scale & Scope Scale & Scope IPS Go-To-Market Strategy Cross-Sell New Business MRO Capture Global Balance Strategic account focus Leverage expertise to win at OEMs Grow installed base Add resources in China, LASA, EMEA Cross-sell evolves to full Powertrain Target OEMs in
Slide 40: IPS Key Takeaways
IPS Key Takeaways 01 02 03 04 Leveraging distinctive Expanding solution Aligning investments Extending business scale and unrivaled sales through cross- to higher growth durability through scope, to create unique selling, and markets and aggressive pursuit of customer value ultimately, complete mega
Slide 41: Break
Break INVESTOR DAY 2024 fregalRexnord
Slide 42: A New Product Driven Growth Story
A New Product Driven Growth Story © 2024 Regal Rexnord Corporation Brooke Lang EVP & President, Power Efficiency Solutions INVESTOR DAY 2024
Slide 43: Power Efficiency Solutions (PES) Snapshot
Power Efficiency Solutions (PES) Snapshot Key Products Financials (2023) ~$1.8B Super Premium Efficiency Motors Premium Efficiency Air Moving Systems Blowers Axial Fans Sales 4%3% 3% 13% ~30% 25% 8% 33% © 2024 Regal Rexnord Corporation 10% Sales By Sales By Channel Adj. Gross Margin* End Geography M
Slide 44: PES Competitive Advantages
PES Competitive Advantages 3-Year Financial Targets (2024 - 2027E) • Leading performance, reliability, and Technology energy efficiency in variable speed Leadership motors and air moving solutions 2 – 3% Sales Growth CAGR Global • In region for region Manufacturing • Supply chain resiliency © 2024 R
Slide 45: A More Focused, Higher-Quality Portfolio
A More Focused, Higher-Quality Portfolio SKU Count Revenue per SKU ($ ‘000) ~23K ~$88 ~16K ~30% ~$57 Drivers ~55% • 80/20 • Strategic focus on air moving solutions and 2020 2023 2020 2023 market-leading energy efficiency © 2024 Regal Rexnord Corporation Sales from Solutions Adj. Gross Margin* • eCom
Slide 46: Shifting to Growth Through Innovation
Shifting to Growth Through Innovation Raising New Product Vitality1 ~24% Strategic • Global platforms ~14% • Energy efficiency leader Priorities • Leveraging global scale ~4% 2018 2024E 2027E Segment • Entering higher-growth end markets • Maximizing aftermarket Pruning Trend © 2024 Regal Rexnord Cor
Slide 47: PES Growth Strategy
PES Growth Strategy Target High Growth Markets Growth investments aligned to secular and mega trends Solution Selling Moving up the value chain from components © 2024 Regal Rexnord Corporation Raise Business Durability Strategies to reduce cyclicality Leverage Unrivaled Scale & Scope Our transformed
Slide 48: High Growth Opportunities
High Growth Opportunities High Growth High Efficiency Clean Rooms Data Centers Heat Pumps Motors 3Y Market CAGR MSD HSD LDD HSD © 2024 Regal Rexnord Corporation Sustainability Reshoring AI Sustainability Megatrends Regulation Gov. Stimulus E-Commerce Regulation High Efficiency Axial Fans Innovations
Slide 49: Regulatory Tailwinds Create Opportunities
Regulatory Tailwinds Create Opportunities High Growth Geopolitical Pool Pump Medium Electric Expanded Scope Motors Motors and Pool Electric Motors Trends U.S. Energy Pump Motors and Efficiency U.S. Energy Fans/Blowers Global Regulation Efficiency U.S. Energy Protectionism Regulation Efficiency Regul
Slide 50: Rising Demand for More Efficient Solutions
Rising Demand for More Efficient Solutions Solution Selling 3rd Year Growth Opportunity Win Strategy Representative Applications New Product Development AC/HP Condenser +$40M 10 – 12 pts Higher Efficiency © 2024 Regal Rexnord Corporation Pool Pump Pool Pump +$20M Dual Offering: Base ECM & Premium Va
Slide 51: Fan Filter Solutions for Clean Rooms
Fan Filter Solutions for Clean Rooms Solution Selling 3rd Year Growth Opportunity Win Strategy Representative Applications Fan Filter Units HSD Market Segment CAGR Driving Fan Filter Solution Industry Leading Efficiency Demand “One-Stop” Turnkey Solutions © 2024 Regal Rexnord Corporation +$35M Broad
Slide 52: Solutions for Data Center Cooling
Solutions for Data Center Cooling Solution Selling 3rd Year Growth Opportunity Win Strategy Representative Applications Air Handler / New Product Innovation Motorized Impeller Fan Array Leading energy efficiency and power density Package Rooftop © 2024 Regal Rexnord Corporation Premium Efficiency Mo
Slide 53: Solutions for the Heat Pump Market
Solutions for the Heat Pump Market Solution Selling 3rd Year Growth Opportunity Win Strategy Representative Applications Energy Efficiency Leverage NA HVAC Regulation Fueling HSD Leadership Position Growth High-Efficiency Axial © 2024 Regal Rexnord Corporation Fan Systems +$70M Lowest noise, most co
Slide 54: Raising Durability with Aftermarket Expansion
Raising Durability with Aftermarket Expansion Durability 3rd Year Growth Opportunity Win Strategy New Product Innovation Build Contractor Loyalty With Next Gen ECM Motor Unique Auto-Configure Design High First-Trip Success © 2024 Regal Rexnord Corporation ~2X contractor first trip success vs +$25M i
Slide 55: Flexible Global Manufacturing
Flexible Global Manufacturing Scale & Scope Enablers Standard Product Platforms Late-Stage Customization © 2024 Regal Rexnord Corporation Supply Chain Redundancy Key Final Assembly Manufacturing Plants Providing Supply Resiliency with Our Flexible Manufacturing Footprint 55 INVESTOR DAY 2024
Slide 56: PES Key Takeaways
PES Key Takeaways 01 02 03 04 Used 80/20 to create a Investing in new Expanding our air Leveraging our flexible, more focused, higher- products to moving solutions global manufacturing quality portfolio strengthen our core offering to footprint to raise offering and enter enhance our value supply ch
Slide 57: Driving Innovation in High-growth Markets
Driving Innovation in High-growth Markets Kevin Zaba EVP & President, Automation & Motion Control INVESTOR DAY 2024
Slide 58: Automation & Motion Control (AMC) Snapshot
Automation & Motion Control (AMC) Snapshot Key Products Financials (2023) ~$1.7B Conveying Solutions Precision Components Linear Actuators Servo Motors Servo Drives & Systems Power Management Sales1 6% 6% 6% 10% ~40% Sales By 32% Channel 14% Sales By 30% 24% Adj. Gross Margin* Geography Mix End Mark
Slide 59: AMC Competitive Advantages
AMC Competitive Advantages 3-Year Financial Targets (2024 – 2027E) Technology • Reputation for high precision, performance, reliability, and productivity Leadership 4 – 7% Sales Growth CAGR Deep Domain • Deep application knowledge across Expertise secular end markets 24 – 26% Adj. EBITDA Margin* Dig
Slide 60: AMC Growth Strategy
AMC Growth Strategy Target High Growth Markets Growth investments aligned to secular and mega trends Solution Selling Moving up the value chain from components Raise Business Durability Strategies to reduce cyclicality Leverage Unrivaled Scale & Scope Our transformed portfolio enables unique custome
Slide 61: ~86% Of Sales In Secular Markets
~86% Of Sales In Secular Markets* High Growth 14% General Industrial 30% 6% Discrete Data Center Automation Relevant Growth Drivers: • Labor (Availability & Aging) 10% • Electrification Medical • Regulatory • Sustainable Manufacturing • Medical Technology Advancements 20% 20% • Data Proliferation Ae
Slide 62: A Clear Secular Market Growth Strategy
A Clear Secular Market Growth Strategy High Growth Discrete Market Automation Food & Beverage Aerospace Medical Data Center 3Y Market CAGR MSD L/MSD HSD M/HSD M/HSD AMC 2023 Sales ~30% ~20% ~20% ~10% ~6% • Robotics • Pasteurizing • Environmental Control • Surgical Robots • Data Centers • Precision M
Slide 63: Discrete Factory Automation
Discrete Factory Automation ROBOTICS & AUTOMATION High Growth Principal Offerings Automation Control Software & Hardware Servo Drives, Motors & Solutions Industrial Robots Conveyor Automation Linear Motion & Precision Components Automation Solutions Industrial Safety Machine Tools Re-Shoring and Lab
Slide 64: Case Study | Cobot 7th Axis Solution
Case Study | Cobot 7th Axis Solution High Solution Growth Selling Growth Opportunity How RRX Wins MovoTrack Cobot Transfer Unit Cobot Sales ~20% CAGR1 Demonstrated Productivity Motion Control System Gains via Solution Movopart Actuators • Automation-light cobots allow • ~20% reduced start-up time vi
Slide 65: Food & Beverage
Food & Beverage AUTOMATION & CONVEYING Solution Scale & Selling Scope Principal Offerings Conveying Chains & Components Servo Drives, Motors & Solutions Linear Motion & Precision Components Automation Solutions & Mobile Robot Technologies Bottling Line Application Leveraging Domain Expertise and RRX
Slide 66: Food & Beverage | Sustainable Line Optimization
Food & Beverage | Sustainable Line Optimization Solution Selling Durability Growth Opportunity How RRX Wins Representative Applications Rising Demand For Sustainability, Portfolio FlushTopTM Sustainable Solutions Breadth, Service Capabilities Conveyor Chain Sizable Cross-sell • ~30% less water utili
Slide 67: Aerospace
Aerospace COMPONENTS & SOLUTIONS High Growth Principal Offerings Electric Linear & Rotary Actuation Ruggedized Servo Motors Commercial Aircraft Helicopter Precision Motion Components Advanced Air Mobility (AAM) Satellite Solutions Leverage RRX-Wide Technology Leadership 67 INVESTOR DAY 2024
Slide 68: Portfolio of Anchor Brands Enables Cross-sell
Portfolio of Anchor Brands Enables Cross-sell Solution Selling Helicopter Commercial Transportation Anchor Brands Pull-Through Opportunity for Broader Aerospace Portfolio Commercial Space Defense Anchor Brands 68 INVESTOR DAY 2024
Slide 69: Case Study | Advanced Air Mobility Solution
Case Study | Advanced Air Mobility Solution High Solution Durability Scale & Growth Selling Scope Growth Opportunity How RRX Wins Electromechanical Actuator for AAM AAM Production Expected Value-Added Solution to Grow to ~2,000 Units Per Year by 20301 • Portfolio breadth • $220K ship set potential p
Slide 70: Medical
Medical DIAGNOSTIC & MEDICAL ROBOTICS High Growth Principal Offerings Precision Motors (Including Micro Motors) Servo Drives & Controls Surgical Robots Diagnostic Imaging Linear Motion & Precision Components Diagnostic Testing Medical Hand Tools Precision Engineered Motion Components & Solutions Mee
Slide 71: Case Study | Surgical Robotics
Case Study | Surgical Robotics High Solution Growth Selling Medical-Grade Components Growth Opportunity How RRX Wins & Solutions Robotic Surgery Growing Share With New Equipment Growing at Medical-Grade Products 15% CAGR1 • Procedures doubled in last 3 • Up to ~25% more power dense Servo Motors Line
Slide 72: Data Center
Data Center COMPONENTS & SOLUTIONS High Solution Growth Selling Principal Offerings Switchgear Switchgear & Automatic Transfer Switches Terminal Blocks Fuse Holders Power Distribution Blocks Cooling Systems Automatic Transfer Switch Cooling Systems Terminal Blocks, Fuse Holders & Distribution Blocks
Slide 73: Selective Expansion When Motion Matters
Selective Expansion When Motion Matters High Growth Ultra Premium Historic ~$2B Precise Performance, Focus +$50M High-End Equipment Selective 3rd Year Growth Expansion ~$4B Premium Opportunity Into High Performance, Broad High- & Equipment Applicability Mid-Premium ~$10B Not Our Standard Focus Basic
Slide 74: Case Study | Premium Market Expansion
Case Study | Premium Market Expansion High Solution Growth Selling Expanded Kollmorgen Growth Opportunity How RRX Wins Automation Platform Discrete Factory Simplified High Performance, CURRENT NEW & Automation Growing MSD1 High Precision Motion Control Ultra-Premium High- & Mid-Premium • Traditional
Slide 75: AMC Key Takeaways
AMC Key Takeaways 01 02 03 04 Well positioned in Expanding solutions Investing in Expanding our durable, high growth offering and strategic new addressable market markets accelerating cross- products to accelerate growth sell opportunities 75 INVESTOR DAY 2024
Slide 76: Many Levers to Create Shareholder Value
Many Levers to Create Shareholder Value Rob Rehard EVP, Chief Financial Officer INVESTOR DAY 2024
Slide 77: Key Messages
Key Messages A Powerful 01 Controllable execution plus secular tailwinds should drive 02 Path to 40% Adj. GM* & 25% Adj. EBITDA margin* exiting an organic growth 2025 – largely volume- Enterprise inflection in 2H 2024, and independent – plus potential High Secular Exposures further acceleration beyo
Slide 78: Transformation Across All Key Metrics
Transformation Across All Key Metrics 2018 From To 2023 ~$4B Enterprise Value ~$16B 7 - 9x EV/EBITDA Multiple 10 - 12x 77% 29% 28% $3.6B Adj. Net Sales* ~$6.2B2 ~24% Customer Concentration1 ~11% ~27% Adj. Gross Margin* ~36%2 ~15% Adj. EBITDA Margin* ~22%2 23% $285M Adj. Free Cash Flow* ~$683M 43% *
Slide 79: Strong Total Shareholder Return Since 2019
Strong Total Shareholder Return Since 2019 +145% 2019 2020 2021 2022 2023 2024 79 INVESTOR DAY 2024
Slide 80: 2024 Guidance
2024 Guidance1 Disciplined Financial Management Offsetting Macro Pressures As of August 1, 2024 • 1H destocking and end market pressures in residential HVAC and -4% to -1% discreet automation Net Sales* Growth Y/Y • Solid margin expansion on synergies, 80/20 and Lean, net of strategic growth investm
Slide 81: 3 Year Sales & Margin Outlook
3 Year Sales & Margin Outlook Organic Growth Adj. Gross Margin* Adj. EBITDA Margin* Market CAGR 1.5 – 3.5% On Track to ~40% On Track to ~25% + Outgrowth Exiting 2025; Exiting 2025; = Sales CAGR 2.0-5.0% Steady Thereafter Steady Thereafter Expect Performance to Track Towards Top Quartile Peers 81 INV
Slide 82: Synergies Underpin Sizable Controllable Execution
Synergies Underpin Sizable Controllable Execution M&A Cost Synergy Targets M&A Cross-Sell Synergy Targets PMC Altra PMC Altra +$15M ~$325 ~$310 ~$250+ ~$160 ~$205 ~$175 ~$125 New ~$70 ~$125 ~$120 ~$20 ~$150 ~$135 ~$150 ~$125 ~$100 Previously Announced Through 2024E 2027E Previously Announced Through
Slide 83: Growth and Margins by Business Unit
Growth and Margins by Business Unit Sales Margins* 2024E Sales1 3Y CAGR 2024E Adj. 2027E Adj. EBITDA Margin1 EBITDA Margin Industrial Powertrain ~$2.7B 2 – 5% ~26% 27 – 29% Solutions Power Efficiency Solutions ~$1.7B 2 – 3% ~16.5% 17 – 18% Automation & Motion Control ~$1.7B 4 – 7% ~24% 24 – 26% Expe
Slide 84: Growing Earnings Per Share
Growing Earnings Per Share Growth Drivers +LDD Higher Sales Higher Margins Lower Interest Expected Adjusted EPS CAGR1 Costs for 2024 - 2027 Period 84 INVESTOR DAY 2024 1 Calculated vs. mid-point of 2024 Adjusted EPS guidance range as of August 1, 2024
Slide 85: Strong Free Cash Flow Creates Optionality
Strong Free Cash Flow Creates Optionality Adjusted Free Cash Flow Margin* Targets Low – Mid Teens ~11%1 2024E 2027E Targeting Over $1B in Annual Adjusted FCF, Enabling Significant Capital Deployment Upside 85 INVESTOR DAY 2024 1 Reflects guidance as of August 1, 2024 * Non-GAAP financial measurement
Slide 86: Capital Deployment Can Accelerate Inorganic Growth
Capital Deployment Can Accelerate Inorganic Growth Current Uses of Cash Anticipated Uses of Cash (2025E – 2027E) Capex Debt reduction to 2.0 – 2.5x net leverage Dividends Debt Reduction Funding organic growth Maintaining commitment to pay our dividend Mix Of M&A And Stock Capex light business model
Slide 87: Significant Equity Upside From Debt Reduction
Significant Equity Upside From Debt Reduction Components of Enterprise Value Key Assumptions • 2024 Guidance Assumptions1 • ~3.5% Sales CAGR for 2024 – 2027E • Achieve Stated Margin Targets • Deploy Post-Dividend Cash Flow to Debt Reduction • Constant EV/EBITDA Multiple Expect Capital Structure Mix
Slide 88: A Solid Investment Grade Credit
A Solid Investment Grade Credit Net Debt*/Adj. EBITDA* Senior Notes Maturity Schedule2 (Millions) No Significant Maturities Until 2026 3.3x ~$3,600 <2.5x 1.5 – 2.0x 1.0 - 1.5x1 $1,100 $0 $0 2018 - 2023 2024E 2025E Thereafter 2025E 2026E 2027E Thereafter Anticipate Steady Progress Lowering Our Levera
Slide 89: Closing the Gap With Top Quartile Peers
Closing the Gap With Top Quartile Peers Adj. Gross Margin* Adj. EBITDA Margin* ~40% 34 - 43% ~36% ~25.0% 20 - 31% ~22.4% ~27% 15% 2018 RRX 2024E RRX 2027 RRX Top Quartile 2018 RRX 2024E RRX 2027 RRX Top Quartile Target Peers* Target Peers* Adj. Free Cash Flow Margin* Organic Sales Growth* Low – Mid
Slide 90: Closing the Gap With Top Quartile Peers
Closing the Gap With Top Quartile Peers1 ROIC Net Debt/EBITDA* EV/EBITDA 13 - 20x 3.3x 14% 10 - 12% ~11x 1.9x 1.5 - 2.0x <1 - 2.5x ~6% 2 2 2 2024E RRX 2027 RRX Top Quartile 2018 RRX 2024E RRX 2027 RRX Top Quartile 2024E RRX Top Quartile Peers Target Median Target Peers 90 INVESTOR DAY 2024 1 Reflect
Slide 91: Disciplined M&A Criteria
Disciplined M&A Criteria M&A Targets Pre-Screen Vision State • Must Clear Specific Margin & Growth Hurdles Market Market • Secular/GDP+ Growth • Limited Tech Disruption • Deal Runway Target Target • Path to Gross Margins >40% • Leading Position/Brand • Differentiated Product Fit Fit • Fit With RRX C
Slide 92: Portfolio Evolution as a Proven M&A Compounder
Portfolio Evolution as a Proven M&A Compounder Current Mix Organic Growth M&A 2024E 2027E 2030E 28% 28% 24% 29% 30% 37% 43% 42% 39% IPS PES AMC • Growth consistent with M&A Assumptions 2024 – 2027 targets • 50% of cash flow to fund M&A provided today • Begins when net leverage is <2.5x • Consistent
Slide 93: Next Stage in Our Transformation Journey
Next Stage in Our Transformation Journey 2023 From To 2027E ~$6.2B1 Adj. Net Sales* ~$6.4 to ~$7.0B ~2.2%2 Sales CAGR 2 – 5% (’19 – ’23) (’24E – ’27E) 29% 28% 28% 30% 1 ~36% Adj. Gross Margin* ~40% ~22%1 Adj. EBITDA Margin* ~25% ~$9.15 Adj. Diluted EPS* Growth +LDD (’24E – ’27E) ~11% FCF Margin* Low
Slide 94: A Powerful Enterprise Fuels More Durable Growth and Delivers Top Quartile Results
A Powerful Enterprise Fuels More Durable Growth and Delivers Top Quartile Results. 94 INVESTOR DAY 2024
Slide 95: Q&A
Q&A INVESTOR DAY 2024 frRegalRexnord
Slide 96: Appendix
Appendix Forward-Looking Non-GAAP Financial Measures The Company believes that a quantitative reconciliation of forward-looking non-GAAP information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reco
Slide 97: Appendix
Appendix Total Regal Rexnord Net Sales Total Regal Rexnord Adjusted Net Sales Unaudited Unaudited (Dollars in Millions) (Dollars in Millions) Year Ended Year Ended Dec 29, 2018 Dec 31, 2023 Net Sales $ 3,645.6 Net Sales $ 6,250.7 Net Sales from Businesses Acquired(1) 451.1 Pro Forma Net Sales 6,701.
Slide 98: Appendix
Appendix Pro Forma Net Sales Unaudited (Dollars in Millions) Year Ended December 31, 2023 Industrial Powertrain Power Efficiency Automation & Motion Total Regal Solutions Solutions Control Industrial Systems Rexnord Net Sales $ 2,403.5 $ 1,808.9 $ 1,516.8 $ 521.5 $ 6,250.7 Net Sales from Businesses
Slide 99: Appendix
Appendix Total Regal Rexnord Adjusted EBITDA Margin Unaudited (Dollars in Millions) Year Ended Dec 29, 2018 Net Sales $ 3,645.6 GAAP Income from Operations $ 347.0 Restructuring and Related Costs 7.7 Purchase Accounting and Transaction Costs 5.4 Gain on Sale of Assets (2.6) Operating Income from Bus
Slide 100: Appendix
Appendix Adjusted EBITDA Margin Unaudited (Dollars in Millions) Year Ended Dec 29, 2018 Commercial & Power Industrial Climate Transmission Systems Solutions Solutions Total Regal Net Sales $ 1,782.0 $ 1,024.8 $ 838.8 $ 3,645.6 GAAP Income from Operations $ 127.0 $ 115.6 $ 104.4 $ 347.0 Restructuring
Slide 101: Appendix
Appendix Total Regal Rexnord Adjusted EBITDA Margin Total Regal Rexnord Adjusted EBITDA Unaudited Unaudited (Dollars in Millions) (Dollars in Millions) Year Ended Year Ended December 31, 2023 Dec 31, 2023 Total Regal Rexnord Industrial Adjusted Net Sales $ 6,180.3 GAAP Income (Loss) from Operations
Slide 102: Appendix
Appendix Pro Forma Net Income to Adjusted EBITDA Unaudited (Dollars in Millions) Year Ended Dec 31, 2023 Pro Forma Net Loss $ (84.4) Plus: Income Taxes 45.3 Plus: Interest Expense 463.3 Less: Interest Income (14.4) Plus: Depreciation 181.5 Plus: Amortization 346.2 Pro Forma EBITDA 937.5 Plus: Restru
Slide 103: Appendix
Appendix PRO FORMA NET LOSS Unaudited (Dollars in Millions) Transaction Accounting Regal Rexnord Year Ended December Altra January 1, 2023 to March 27, Transaction Accounting Adjustment - Pro Forma Adjustment - Altra Transaction 31, 2023 2023 Altra Transaction (Note 1) Combined (Note 2) Net (Loss) I
Slide 104: Appendix
Appendix Adjusted EBITDA Unaudited (Dollars in Millions) Year Ended December 31, 2023 Industrial Powertrain Power Efficiency Automation & Industrial Solutions Solutions Motion Control Systems Total Regal Rexnord GAAP Income (Loss) from Operations $ 151.8 $ 217.4 $ 139.0 $ (131.1) $ 377.1 Restructuri
Slide 105: Appendix
Appendix Total Regal Rexnord Free Cash Flow Total Regal Rexnord Adjusted Free Cash Flow Unaudited Unaudited (Dollars in Millions) (Dollars in Millions) Year Ended Year Ended Dec 29, 2018 Dec 31, 2023 Net Cash Provided by Operating Activities $ 362.7 Net Cash Provided by Operating Activities $ 715.3
Slide 106: Appendix
Appendix Total Regal Rexnord Adjusted Gross Margin Unaudited (Dollars in Millions) Year Ended Dec 29, 2018 Net Sales $ 3,645.6 Gross Profit $ 964.6 Restructuring & Related Costs 3.2 Adjusted Gross Margin $ 967.8 Adjusted Gross Margin 26.5% 106 INVESTOR DAY 2024
Slide 107: Appendix
Appendix Adjusted Gross Margin Unaudited (Dollars in Millions) Year Ended Dec 29, 2018 Commercial & Power Industrial Climate Transmission Systems Solutions Solutions Total Regal Net Sales $ 1,782.0 $ 1,024.8 $ 838.8 $ 3,645.6 Gross Profit $ 423.4 $ 262.7 $ 278.5 $ 964.6 Restructuring & Related Costs
Slide 108: Appendix
Appendix Total Regal Rexnord Adjusted Gross Margin Unaudited (Dollars in Millions) Year Ended Dec 31, 2023 Pro Forma Industrial Adjusted Net Sales $ 6,701.8 $ (521.5) $ 6,108.3 Gross Margin $ 2,224.1 $ (115.9) $ 2,108.2 Restructuring & Related Costs 37.9 - 37.9 Inventory and Operating Lease Asset St
Slide 109: Appendix
Appendix Adjusted Gross Margin Unaudited (Dollars in Millions) Year Ended December 31, 2023 Industrial Powertrain Power Efficiency Automation & Motion Solutions Solutions Control Industrial Systems Total Regal Rexnord Net Sales $ 2,403.5 $ 1,808.9 $ 1,516.8 $ 521.5 $ 6,250.7 Gross Margin $ 844.1 $ 5
Slide 110: Appendix
Appendix Adjusted Gross Margin Unaudited (Dollars in Millions) Year Ended Jan 2, 2021 Motion Power Commercial Industrial Climate Control Efficiency Systems Systems Solutions Solutions Total Regal Solutions1 Net Sales $ 820.2 $ 528.8 $ 846.8 $ 711.2 $ 2,907.0 $ 1,667.0 Gross Profit $ 212.8 $ 94.6 $ 2
Slide 111: Appendix
Appendix Total Regal Rexnord Net Debt/Adjusted EBITDA Unaudited (Dollars in Millions) Year Ended Dec 29, 2018 Current Maturities of Long-Term Debt $ 0.5 Long-Term Debt 1,306.6 Total Gross Debt $ 1,307.1 Cash (248.6) Net Debt $ 1,058.5 Net Income $ 235.8 Plus: Income Taxes 56.4 Plus: Interest Expense
Slide 112: Appendix
Appendix Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Year Ended December 31, 2023 $ 2,403.5 $ 1,808.9 $ 1,516.8 $ 521.5 $ 6,250.7 Net Sales Acquired Year Ended December 31, 2023(1) 234.4 - 216.7 - 451.1 Net S
Slide 113: Appendix
Appendix Adjusted Diluted Earnings Per Share Unaudited Year Ended Dec 31, 2023 GAAP Earnings (Loss) Per Share $ (0.87) Intangible Amortization 3.49 Restructuring and Related Costs 0.96 Share-Based Compensation Expense 0.72 Inventory and Operating Lease Asset Step Up 0.62 Impairments and Exit Related
Slide 114: 2024 Adjusted Annual Guidance
Appendix 2024 ADJUSTED ANNUAL GUIDANCE Unaudited Minimum Maximum 2024 GAAP Diluted EPS Annual Guidance $ 3.70 $ 4.10 Intangible Amortization 3.92 3.92 Restructuring and Related Costs 0.68 0.68 Share-Based Compensation Expense 0.51 0.51 Operating Lease Asset Step Up 0.01 0.01 Impairments and Exit Rel