Zurn Elkay Water Solutions Corporation · NYSE:ZWS
Zurn Elkay Water Solutions — Rexnord — Q4 FY2020 Earnings Presentation
23 slides from Zurn Elkay Water Solutions's earnings presentation, May 13, 2020
Slide 1: Fourth Quarter Fiscal Year 2020 Financial Results
FOURTH QUARTER FISCAL YEAR 2020 FINANCIAL RESULTS May 13, 2020
Slide 2: Cautionary Statement Under the Private Securities Litigation Reform Act
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT This presentation and discussion contains certain forward-looking statements that are subject to the Safe Harbor and Cautionary language contained in the press release we issued on May 12, 2020, as well as other factors that cou
Slide 3: Fiscal Year 2020 Review
FISCAL YEAR 2020 REVIEW Consolidated Rexnord • FY20 net sales increased +1% year over year, core growth(1) +1% ➢ 8020 product line simplification reduced FY20 sales growth by 150 bps • FY20 EPS of $1.46, including $0.23 per share non-cash actuarial loss on pension and OPEB ➢ Adjusted EPS(1) increase
Slide 4: Operating Environment
OPERATING ENVIRONMENT • Required all associates who can work from home to do so • Established social distancing protocols within offices and manufacturing sites • Utilizing IT Collaboration and Productivity Tools in lieu of travel and face-to-face meetings • Created daily cleaning and disinfecting p
Slide 5: Our Plan
OUR PLAN 1. Transition fiscal year end to December 31 – will report 9-month interim period in 2020 ➢ Will also provide pro forma calendar-year-to-date results during 2020 ➢ Better align operating/valuation comparisons with broader peer sets and direct competitors 2. Flex cost structure in line with
Slide 6: Decisive, High-Impact Response
DECISIVE, HIGH-IMPACT RESPONSE • Flexing cost structure ➢ Tiered unpaid furloughs for exempt employees ➢ Salary freeze for exempt employees ➢ Limited workforce reductions – salaried and hourly ➢ Limited plant furloughs ➢ Restrictions on all non-essential spending, including travel • Total cost savin
Slide 7: Amplifying Our ESG Profile
AMPLIFYING OUR ESG PROFILE Find at: https://rexnordcorporation.com/en-US/Social-Responsibility Rexnord Corporation 7
Slide 8: Culture Matters
CULTURE MATTERS Rexnord Corporation 8
Slide 9: Touchless Hygienic Handwashing
TOUCHLESS HYGIENIC HANDWASHING Rexnord Corporation 9
Slide 10: Remote Monitoring: Food Sector
REMOTE MONITORING: FOOD SECTOR Improved production efficiency, reliability, throughput • Condition-based maintenance optimizes productivity • Reduced unplanned downtime, equipment failure • Reduced equipment inspection downtime • Reduced maintenance staffing requirements • Reduced operating costs En
Slide 11: Process & Motion Control Platform
PROCESS & MOTION CONTROL PLATFORM FY20 Results ($mm): Key FY20 Figures ($mm): Key Facts: Total Revenue $1,358 Costs: Material/Labor/OH (%) 41/40/19 8020 SKU reduction to date 10,000 Core Growth(1) (1%) Trade Working Capital % Revenue 21% FY20 eCommerce growth 42% Adjusted EBITDA(1) Margin 23.0% Capi
Slide 12: Water Management Platform
WATER MANAGEMENT PLATFORM FY20 Results ($mm): Key FY20 Figures ($mm): Key Facts: Total Revenue $710 Costs: Material/Labor/OH (%) 51/17/32 8020 SKU reduction to date 11,400 Core Growth(1) 4% Trade Working Capital % Revenue 26% FY20 eCommerce growth 21% Adjusted EBITDA(1) Margin 26.4% Capital Expendit
Slide 13: Well Positioned for Challenging Environment
WELL POSITIONED FOR CHALLENGING ENVIRONMENT Enhanced liquidity position at March 31 • $573 million cash on balance sheet ➢ Drew $325 million under revolver, receivables facilities to protect short-term liquidity • Net debt leverage ratio(1) unchanged at 1.9x • No long-term debt maturities before Aug
Slide 14: What We're Seeing – Consolidated
WHAT WE’RE SEEING – CONSOLIDATED Rexnord Corporation 14
Slide 15: What We're Seeing – PMC ex-Aero
WHAT WE’RE SEEING – PMC ex-AERO Rexnord Corporation 15
Slide 16: What We're Seeing – PMC Aerospace
WHAT WE’RE SEEING – PMC AEROSPACE Rexnord Corporation 16
Slide 17: What We're Seeing – Water Management
WHAT WE’RE SEEING – WATER MANAGEMENT Rexnord Corporation 17
Slide 18: June Quarter Planning Guideposts
JUNE QUARTER PLANNING GUIDEPOSTS Remainder of 2020 likely to remain challenged by macro declines ➢ “Controlling the controllable” – while retaining capacity to fully participate in recovery Key June quarter guideposts • Sales decline of 18%-23% year over year • Segment Adjusted EBITDA(1) margin* in
Slide 19: Appendix
REXNORD APPENDIX
Slide 20: 4Q FY2020 Financial Results
4Q FY2020 FINANCIAL RESULTS • Net sales increased +2% year over year ➢ Acquisitions increased sales by +1% • Core sales(1) increased +1% year over year ➢ 8020 product line simplification reduced growth by 180 bps • Adjusted EBITDA(1) of $124 million increased +3% year over year • Diluted Earnings Pe
Slide 21: 4Q Platform Results
4Q PLATFORM RESULTS $ millions 4Q FY20 4Q FY19 Change PMC Net Sales $364 $373 (2%) Growth from: • 8020 product line simplification reduced sales growth by 230 bps Core (1) (1%) • Launched expanded offering of digitally-enabled gear-drive Acquisitions 0% products with scalable Smart Condition Monitor
Slide 22: Cash Flow & Balance Sheet
CASH FLOW & BALANCE SHEET Net Debt Leverage Ratio (1) Free Cash Flow ($ millions) (2) 4.0x 300 3.8x 3.5x 250 3.1x 200 3.0x 2.7x 150 2.5x 257 100 213 167 188 2.1x 1.9x 1.9x 141 2.0x 50 108 1.9x 94 1.5x 0 • Moderate Leverage Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Dec-19 Mar-20 FY16 FY17 FY18 FY19 FY20 4Q
Slide 23: Rexnord's Underlying Return on Invested Capital
REXNORD’S UNDERLYING RETURN ON INVESTED CAPITAL(1) 2006 LBO change-of-control premium resulted $ millions Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 in $1.723 billion of goodwill & intangibles Total Debt 1,238 1,265 1,251 1,149 1,473 1 Adjust debt by unamortized portion of intangible assets Goodwill Intangi