Regal Rexnord Corporation · NYSE:RRX

Regal Rexnord — Regal Beloit — Q4 2020 Earnings Presentation

28 slides from Regal Rexnord's earnings presentation, Feb 16, 2021

  1. Slide 1: Fourth Quarter 2020 Earnings Conference Call

    4Q February 16, 2021 Fourth Quarter 2020 Earnings CONFERENCE CALL Louis Pinkham Rob Rehard Chief Executive Officer Vice President Chief Financial Officer

  2. Slide 2: Cautionary Statement

    4Q 2020 CAUTIONARY STATEMENT Forward Looking Statements This communication contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company’s current estimates, expectations and projections about the Company’s future

  3. Slide 3: Non-GAAP Financial Measures

    4Q 2020 NON-GAAP FINANCIAL MEASURES We prepare financial statements in accordance with accounting principles generally accepted percentage of adjusted net income attributable to Regal Beloit Corporation, adjusted income in the United States of America (“GAAP”). We also periodically disclose certain

  4. Slide 4: Agenda: Opening Comments & Overview

    4Q 2020 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2020 Results & 1Q 2021 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2020 Regal Beloit Corporation 4

  5. Slide 5: CEO Commentary and Overview

    4Q 2020 CEO COMMENTARY AND OVERVIEW • Sales Up 4.9% on an Organic Basis ($ in millions, except per share data) 4Q 2019 4Q 2020 • Short Cycle Industrial Recovery Still Ahead • 80/20 Pruning Initiatives Reduced Sales by ~190bps Adjusted Net Sales* $738.0 $780.5 • Adjusted Operating Margin Up 240bps On

  6. Slide 6: Agenda: 4Q 2020 Results & 1Q 2021 Outlook

    4Q 2020 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2020 Results & 1Q 2021 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2020 Regal Beloit Corporation 6

  7. Slide 7: Commercial Systems

    4Q 2020 COMMERCIAL SYSTEMS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Up 10.1% ($ Millions) from Operations* ($ Millions) • Key Drivers + Pool + China Gains + N.A. G.I. $226.4 + C-HVAC N.A. $202.0 – Europe Air Moving (C-19) ‒ 80/20 Account Pruning (~2.1%) Adjusted Operating Margin* $

  8. Slide 8: Industrial Systems

    4Q 2020 INDUSTRIAL SYSTEMS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* ~Flat ($ Millions) from Operations* ($ Millions) • Key Drivers + Data Centers + China – General Industrial (N.A., MENA) – Oil & Gas – 80/20 Account Pruning (~1.8%) $138.0 $139.8 Adjusted Operating Margin* • 1.9% of

  9. Slide 9: Climate Solutions

    4Q 2020 CLIMATE SOLUTIONS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Up 9.4% ($ Millions) from Operations* ($ Millions) • Key Drivers + N.A. HVAC + Commercial Refrigeration $224.5 – EMEA (C-19) $206.2 $41.9 – 80/20 Pruning (~3.0%) $35.3 Adjusted Operating Margin* • 18.7% of Adj. Net

  10. Slide 10: Power Transmission Solutions

    4Q 2020 POWER TRANSMISSION SOLUTIONS Sales Adjusted Net Sales* Adjusted Income • Organic Sales* Down 1.9% ($ Millions) from Operations* ($ Millions) • Key Drivers – N.A. General Industrial – Upstream Oil & Gas + Aero (Project Win) $191.8 $189.8 + Unit Handling (Modsort Gains) + Ag $32.2 Adjusted Ope

  11. Slide 11: Key Financial Metrics

    4Q 2020 KEY FINANCIAL METRICS Capital Expenditures Balance Sheet as January 2, 2021 • $17.8 Million in 4Q 2020 • Total Debt of $1,071.4 Million • $57.0 Million Expected in FY 2021 • Net Debt of $460.1 Million • Net Debt/Adj. EBITDA* of 1.0 Effective Tax Rate (ETR) • 21.9% Adj. ETR* in 4Q 2020 • 21.0

  12. Slide 12: 1Q 2021 Outlook

    4Q 2020 1Q 2021 OUTLOOK Introducing 1Q 2021 Guidance* • Adjusted Diluted Earnings per Share** in a Range of $1.55 to $1.75 for 1Q, Up Almost 26% Y/Y at the Mid-Point Other FY 2021 Modeling Assumptions • Net Interest Expense of ~$28 Million*** • Capital Expenditures of ~$57 Million • Depreciation & A

  13. Slide 13: Agenda: Questions & Answers

    4Q 2020 AGENDA Opening Comments & Overview LOUIS PINKHAM, CEO 4Q 2020 Results & 1Q 2021 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO ©2020 Regal Beloit Corporation 13

  14. Slide 14: 4Q Appendix

    4Q Appendix

  15. Slide 15: Adjusted Diluted Earnings Per Share

    4Q 2020 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Three Months Ended Twelve Months Ended Jan 2, Dec 28, Jan 2, Dec 28, 2021 2019 2021 2019 GAAP Diluted Earnings Per Share $ 1.23 $ 0.89 $ 4.64 $ 5.66 Restructuring and Related Costs 0.26 0.33 0.69 0.57 Transaction Costs 0.01 — 0.01 — Goodwill Impai

  16. Slide 16: 4Q 2020 Appendix

    4Q 2020 APPENDIX ©2020 Regal Beloit Corporation 16

  17. Slide 17: Adjusted Income from Operations

    4Q 2020 APPENDIX Three Months Ended Power Commercial Transmission ADJUSTED INCOME FROM OPERATIONS Systems Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Jan 2, Dec 28, Jan 2, Dec 28, Jan 2, Dec 28, Jan 2, Dec 28, Jan 2, Dec 28, 2021 2019 2021 2019 2021 2019 2021 201

  18. Slide 18: Adjusted Net Sales

    4Q 2020 APPENDIX Three Months Ended Commercial Power Transmission ADJUSTED NET SALES Systems Industrial Systems Climate Solutions Solutions Total Regal (Dollars in Millions) Jan 2, Dec 28, Jan 2, Dec 28, Jan 2, Dec 28, Jan 2, Dec 28, Jan 2, Dec 28, 2021 2019 2021 2019 2021 2019 2021 2019 2021 2019 N

  19. Slide 19: Adjusted Effective Tax Rate

    4Q 2020 APPENDIX ADJUSTED EFFECTIVE TAX RATE Three Months Ended Twelve Months Ended (Dollars in Millions) Jan 2, Dec 28, Jan 2, Dec 28, 2021 2019 2021 2019 Income before Taxes $ 68.8 $ 51.3 $ 250.6 $ 303.8 Provision for Income Taxes 17.3 13.7 56.8 61.2 Effective Tax Rate 25.1% 26.7% 22.7% 20.1% Inco

  20. Slide 20: Free Cash Flow

    4Q 2020 APPENDIX Three Months Twelve Months FREE CASH FLOW Ended Ended (Dollars in Millions) Jan 2, Dec 28, Jan 2, Dec 28, 2021 2019 2021 2019 Net Cash Provided by Operating Activities $ 125.5 $ 137.3 $ 435.4 $ 408.5 Additions to Property Plant and Equipment (17.8) (15.1) (47.5) (92.4) Free Cash Flo

  21. Slide 21: Organic Sales Growth

    4Q 2020 APPENDIX ORGANIC SALES GROWTH Three Months Ended (Dollars in Millions) Power Commercial Industrial Climate Transmission Systems Systems Solutions Solutions Total Regal Net Sales Three Months Ended Jan 2, 2021 $ 226.4 $ 139.8 $ 224.5 $ 189.8 $ 780.5 Impact from Foreign Currency Exchange Rates

  22. Slide 22: Operating Leverage

    4Q 2020 APPENDIX OPERATING LEVERAGE-TOTAL REGAL Three Months Ended Twelve Months Ended (Dollars in Millions) Jan 2, Dec 28, Jan 2, Dec 28, 2021 2019 Change 2021 2019 Change GAAP Income from Operations $ 74.2 $ 61.7 $ 12.5 $ 280.1 $ 351.1 $ (71.0) Adjusted Income from Operations $ 100.4 $ 77.5 $ 22.9

  23. Slide 23: Total Gross Debt/EBITDA

    4Q 2020 APPENDIX TOTAL GROSS DEBT/EBITDA (Dollars in Millions) TOTAL GROSS DEBT/ADJUSTED EBITDA LTM Jan 2, (Dollars in Millions) 2021 LTM Jan 2, Net Income $ 193.8 2021 Plus: Income Taxes Net Income $ 193.8 56.8 Plus: Interest Expense Plus: Income Taxes 56.8 39.8 Less: Interest Income Plus: Interest

  24. Slide 24: Total Net Debt/EBITDA

    4Q 2020 APPENDIX TOTAL NET DEBT/EBITDA (Dollars in Millions) TOTAL NET DEBT/ADJUSTED EBITDA LTM Jan 2, (Dollars in Millions) 2021 LTM Jan 2, Net Income $ 193.8 2021 Plus: Income Taxes Net Income $ 193.8 56.8 Plus: Interest Expense Plus: Income Taxes 56.8 39.8 Less: Interest Income Plus: Interest Exp

  25. Slide 25: Fiscal 2019 First Quarter Schedule for Ongoing Business

    4Q 2020 APPENDIX The following tables outline by quarter and full year the 2019 net sales and income from operations, and the full year adjusted diluted earnings per share, illustrating the impact of businesses divested and to be exited. Power Commercial Industrial Climate Transmission Systems Syste

  26. Slide 26: Fiscal 2019 Third Quarter Schedule for Ongoing Business

    4Q 2020 APPENDIX Fiscal 2019 Third Quarter Schedule for Ongoing Business Net Sales Three Months Ended September 28, 2019 $ 214.8 $ 143.8 $ 230.9 $ 182.8 $ 772.3 Net Sales from Businesses Divested/to be Exited - - (0.9) - (0.9) Adjusted Net Sales from Ongoing Business $ 214.8 $ 143.8 $ 230.0 $ 182.8

  27. Slide 27: Fiscal 2019 Twelve Months Ended for Ongoing Business

    4Q 2020 APPENDIX Fiscal 2019 Twelve Months Ended for Ongoing Business Net Sales Twelve Months Ended December 28, 2019 $ 879.2 $ 558.0 $ 940.3 $ 756.4 $ 3,133.9 Net Sales from Businesses Divested/to be Exited (25.0) - (22.0) (5.6) (52.6) Adjusted Net Sales from Ongoing Business $ 854.2 $ 558.0 $ 918.

  28. Slide 28: Shipping Days

    4Q 2020 APPENDIX Shipping 1Q 2Q 3Q 4Q FY Days 2015 64 63 64 59 250 2016 64 64 63 60 251 2017 64 63 63 60 250 2018 63 64 63 61 251 2019 63 63 63 61 250 2020 63 63 63 64 253 2021 64 64 63 60 251 ▪ Regal operates on a 52/53 week fiscal year ending on the Saturday closest to December 31 ▪ Fiscal Years 2

Regal Beloit — Q4 2020 Earnings Presentation on 6ix