Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Q1 2024 Earnings Presentation
34 slides from Regal Rexnord's earnings presentation, May 7, 2024
Slide 1: First Quarter 2024 Earnings
Creating a better tomorrow … First Quarter 2024 Earnings May 7, 2024 Louis Pinkham, Chief Executive Officer Rob Rehard, Executive Vice President, Chief Financial Officer
Slide 2: Forward Looking Statements
1Q 2024 FORWARD LOOKING STATEMENTS All statements in this communication, 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,” “estimate,” “expect,” “
Slide 3: Non-GAAP Financial Measures
1Q 2024 NON-GAAP FINANCIAL MEASURES We prepare our financial statements in accordance with accounting principles generally This release also includes non-GAAP forward-looking information. The Company accepted in the United States of America (“GAAP”). We also periodically disclose believes that a qua
Slide 4: Opening Comments & Overview
1Q 2021 Creating a better tomorrow … Opening Comments & Overview LOUIS PINKHAM, CEO 1Q 2024 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 5: An Evolved Purpose for a Transformed Regal Rexnord
1Q 2024 AN EVOLVED PURPOSE FOR A TRANSFORMED REGAL REXNORD Creating a better tomorrow … 5 ©2024 Regal Rexnord Corporation, Proprietary and Confidential
Slide 6: 1Q Performance
1Q 2024 1Q PERFORMANCE • Sales Up 26.4% Y/Y, Down 7.5% On A Pro Forma Organic Basis* • Pro Forma Daily Orders Down 4.3%, Excluding Industrial Systems, In Line With Expectations • Adjusted GM* Of 36.5% Or 37.4% Excluding Industrial Systems o Firmly On Track To 40% Target Exiting 2025 19.5% 20.5% • Ad
Slide 7: Conveying Overview
1Q 2024 CONVEYING OVERVIEW Creating a better tomorrow … 7 ©2024 Regal Rexnord Corporation, Proprietary and Confidential
Slide 8: Opening Comments & Overview
1Q 2021 Creating a better tomorrow … Opening Comments & Overview LOUIS PINKHAM, CEO 1Q 2024 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 9: Automation & Motion Control
1Q 2024 AUTOMATION & MOTION CONTROL Sales • Net Sales Up 96.9% • Key Drivers o Data Center (+) o Medical (+) o Aerospace (+) o Discrete Factory Automation (-) 23.0% 22.5% * Non-GAAP Financial Measurement, See Appendix For Reconciliation Creating a better tomorrow … Strong Secular Market Growth Outsi
Slide 10: Industrial Powertrain Solutions
1Q 2024 INDUSTRIAL POWERTRAIN SOLUTIONS Sales • Net Sales* Up 55.3% • Key Drivers o General Industrial (+) o Energy (+) o Alternative Energy (-) $53. $235.2 5 o Ag/Construction (-) $43. 4 29.3% 25.8% * Non-GAAP Financial Measurement, See Appendix For Reconciliation Creating a better tomorrow … Perfo
Slide 11: Power Efficiency Solutions
1Q 2024 POWER EFFICIENCY SOLUTIONS Sales • Organic Sales* Down 17.8% • Key Drivers o N.A. Residential HVAC (-) $165. o Europe, AsiaPac C-HVAC (-) 5 $39.0 o N.A. C-HVAC (+) $135. o Pool (+) 7 $21.3 13.7% 13.2% $189.8 * Non-GAAP Financial Measurement, See Appendix For Reconciliation Performance Below
Slide 12: Other Financial Updates
1Q 2024 OTHER FINANCIAL UPDATES Capital Expenditures Balance Sheet at March 31, 2024 • $18.5 Million in 1Q 2024 • Total Debt of $6,245.9 Million • Net Debt* of $5,723.5 Million • Net Debt*/Adj EBITDA (Including Synergies)* of 3.82 • Interest Coverage Ratio (Including Synergies)* of ~3.5 Effective Ta
Slide 13: 2024 Outlook
1Q 2024 2024 OUTLOOK • Updating Outlook For Closing Sale Of Industrial Systems And Deploying Net Sale Proceeds To Debt Reduction, Worth ($0.15) Per Share • Making Modest Adjustments To Remaining Operations, Which Are Net Neutral To Adjusted Diluted EPS* • Now Expect 2024 Adjusted Diluted EPS* In A R
Slide 14: Segment Outlook
1Q 2024 SEGMENT OUTLOOK * AMC and IPS performance is pro forma for the Altra transaction Creating a better tomorrow … Expect Stronger 2H Performance On Sales & Margins 14 ©2024 Regal Rexnord Corporation, Proprietary and Confidential
Slide 15: Opening Comments & Overview
1Q 2021 Creating a better tomorrow … Opening Comments & Overview LOUIS PINKHAM, CEO 1Q 2024 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 16: Opening Comments & Overview
1Q 2021 Creating a better tomorrow … Opening Comments & Overview LOUIS PINKHAM, CEO 1Q 2024 Results, 2024 Outlook ROB REHARD, CFO Questions & Answers Closing Remarks LOUIS PINKHAM, CEO
Slide 17: Closing Remarks
1Q 2024 CLOSING REMARKS We Create A Better Tomorrow With Sustainable Solutions That Power, Transmit, And Control Motion Creating a better tomorrow … 17 ©2024 Regal Rexnord Corporation, Proprietary and Confidential
Slide 18: Adjusted Diluted Earnings Per Share
1Q 2024 APPENDIX ADJUSTED DILUTED EARNINGS PER SHARE Unaudited Three Months Ended Mar 31, Mar 31, 2024 2023 GAAP Earnings (Loss) Per Share $ 0.30 $ (0.09) Intangible Amortization 0.98 0.53 Restructuring and Related Costs (a) 0.19 0.07 Share-Based Compensation Expense (b) 0.11 0.31 Impairments and Ex
Slide 19: 2024 Adjusted Annual Guidance
1Q 2024 APPENDIX 2024 ADJUSTED ANNUAL GUIDANCE Unaudited Minimum Maximum 2024 GAAP Diluted EPS Annual Guidance $ 3.97 $ 4.77 Intangible Amortization 4.00 4.00 Restructuring and Related Costs (a) 0.58 0.58 Share-Based Compensation Expense 0.51 0.51 Operating Lease Asset Step Up 0.01 0.01 Impairments
Slide 20: 2024 Net Income to Adjusted EBITDA Annual Guidance
1Q 2024 APPENDIX 2024 NET INCOME TO ADJUSTED EBITDA ANNUAL GUIDANCE Unaudited (Dollars in Millions) Minimum Maximum Net Income $ 275.3 $ 328.5 Plus: Income Taxes 87.0 103.8 Plus: Interest Expense 375.0 375.0 Less: Interest Income (5.0) (5.0) Plus: Depreciation 173.0 173.0 Plus: Amortization 350.0 35
Slide 21: Adjusted EBITDA
1Q 2024 APPENDIX ADJUSTED EBITDA Unaudited (Dollars in Millions) Three Months Ended Industrial Powertrain Power Efficiency Automation & Total Regal Solutions Solutions Motion Control Industrial Systems Rexnord Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, 2024 2023
Slide 22: Net Income to Adjusted EBITDA
1Q 2024 APPENDIX NET INCOME TO ADJUSTED EBITDA Unaudited (Dollars in Millions) Three Months Ended Mar 31, Mar 31, 2024 2023 Net Income (Loss) $ 20.4 $ (5.5) Plus: Income Taxes 10.9 12.3 Plus: Interest Expense 105.4 95.4 Less: Interest Income (3.1) (31.9) Plus: Depreciation 41.5 30.2 Plus: Amortizati
Slide 23: Adjusted Net Sales
1Q 2024 APPENDIX ADJUSTED NET SALES Unaudited (Dollars in Millions) Three Months Ended Industrial Powertrain Power Efficiency Automation & Solutions Solutions Motion Control Industrial Systems Total Regal Rexnord Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, 2024 20
Slide 24: Adjusted Effective Tax Rate
1Q 2024 APPENDIX ADJUSTED EFFECTIVE TAX RATE Unaudited (Dollars in Millions) Three Months Ended Mar 31, 2024 Mar 31, 2023 Income before Taxes 31.3 6.8 Provision for Income Taxes 10.9 12.3 Effective Tax Rate 34.8 % 180.9 % Income before Taxes 31.3 6.8 Intangible Amortization 86.7 46.3 Restructuring a
Slide 25: Adjusted Free Cash Flow
1Q 2024 APPENDIX ADJUSTED FREE CASH FLOW Unaudited (Dollars in Millions) Three Months Ended Mar 31, Mar 31, 2024 2023 Net Cash Provided by Operating Activities $ 83.1 $ 106.2 Payments for Certain Acquisition Costs (Net of Tax of $11.4 Million in 2023) (a) — 86.9 Adjusted Cash Flows from Operations 8
Slide 26: Organic Sales Growth
1Q 2024 APPENDIX ORGANIC SALES GROWTH Unaudited (Dollars in Millions) Three Months Ended Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Mar 31, 2024 $ 643.4 $ 385.3 $ 400.2 $ 118.8 $ 1,547.7 N
Slide 27: Pro Forma Organic Sales Growth (Including Altra)
1Q 2024 APPENDIX PRO FORMA ORGANIC SALES GROWTH (INCLUDING ALTRA) Unaudited (Dollars in Millions) Three Months Ended Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales Three Months Ended Mar 31, 2024 $ 643.4 $ 385.3
Slide 28: Debt to EBITDA
1Q 2024 APPENDIX DEBT TO EBITDA Unaudited (Dollars in Millions) Last Twelve Months Mar 31, 2024 Net Loss $ (28.4) (a) Relates to costs associated with actions taken for employee reductions, facility consolidations and site closures, product line exits and other asset Plus: Income Taxes 51.3 charges.
Slide 29: Adjusted Gross Margin
1Q 2024 APPENDIX ADJUSTED GROSS MARGIN Unaudited (Dollars in Millions) Three Months Ended March 31, 2024 Industrial Power Automation & Powertrain Efficiency Motion Industrial Total Regal Solutions Solutions Control Systems Rexnord Net Sales $ 643.4 $ 385.3 $ 400.2 $ 118.8 $ 1,547.7 Gross Margin $ 26
Slide 30: Pro Forma Adjusted Gross Margin
1Q 2023 APPENDIX PRO FORMA ADJUSTED GROSS MARGIN Unaudited (Dollars in Millions) Three Months Ended March 31, 2023 Pro Forma Net Sales $ 1,675.2 Pro Forma Gross Margin $ 554.9 Pro Forma Restructuring and Related Costs (a) 6.8 Pro Forma Adjusted Gross Margin $ 561.7 Pro Forma Gross Margin % 33.1 % Pr
Slide 31: Pro Forma Adjusted Gross Margin
1Q 2023 APPENDIX PRO FORMA ADJUSTED GROSS MARGIN Unaudited (Dollars in Millions) The following pro forma adjusted gross margin has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Altra Transaction as if it had occurred on January 2, 2022, the first day of
Slide 32: Pro Forma Net Income to Adjusted EBITDA
1Q 2024 APPENDIX PRO FORMA NET INCOME TO ADJUSTED EBITDA Unaudited (Dollars in Millions) Three Months Ended Mar 31, 2023 Pro Forma Net Sales $ 1,675.2 Pro Forma Adjusted Net Sales $ 1,675.2 Pro Forma Net Loss (37.6) Plus: Income Taxes 4.5 Plus: Interest Expense 127.7 Less: Interest Income (2.7) Plus
Slide 33: Pro Forma Net Loss
1Q 2024 APPENDIX PRO FORMA NET LOSS Unaudited (Dollars in Millions) The following pro forma net (loss) income has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Altra Transaction and related debt financing as if they had occurred on January 2, 2022, the
Slide 34: 2023E Pro Forma Sales
1Q 2024 APPENDIX 2023E PRO FORMA SALES Unaudited (Dollars in Millions) Year Ended Dec 31, 2023 Net Sales Year Ended Dec 31, 2023 $ 6,250.7 Net Sales from Businesses Acquired(a) 451.1 Net Sales from Businesses Divested(b) (521.5) 2023E Pro Forma Sales $ 6,180.3 (a) Represents Altra Net Sales prior to