Slide 1: 2011 Fourth Quarter and Full Year Earnings
2011 Fourth Quarter and Full Year Earnings 7
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. Forwarclooking statements represent our management's judgment regarding future events, In many oases, you can identity forwarcHooking statements by termin
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 discloses adjusted diluted earnings per share (EPS), adjusted gross profit, adjusted gross profit as a percentage of net sales, free cash flow
Slide 4: Agenda
Agenda Mark Gliebe Chuck Hinrichs = Jon Schlemmer = Mark Gliebe * All = Mark Gliebe Opening Comments Financial Update Operations Update Summary Q&A Closing Comments
Slide 5: Opening Comments
Opening Comments = Fourth Quarter Results Exceeded Guidance = EPC Integration Proceeding Very Well = Record Fourth Quarter Free Cash Flow = 227% of Net Income = Fourth Quarter - C&l, Mechanical, Unico and EPC Performed Well, Offsetting Headwinds in HVAC and China Businesses
Slide 6: Highlights
Highlights = Launched 20 New Products = Received Supplier of the Year and Supplier Innovation Awards = Reduced Incremental Warranty Reserve by $15.4 million = Restructured Portions of European and Australian Operations = Continued Smooth Integration of EPC and On Track to Achieve First Year Synergy
Slide 7: 4th Quarter 2011 Results vs Guidance
4‘ Quarter 2011 Results vs Guidance Actual Guidance 4Q 2011 Adjusted Diluted EPS $0.93 $0.70 EPC Inventory PAA (0.26) (0.25) Decrease in Warranty Reserve Exp. 0.23 Restructuring Costs (0.10) _ - GAAP Diluted EPS $0.80 $0.45 y -
Slide 8: 4th Quarter 2011 Results vs. Guidance
4‘ Quarter 2011 Results vs. Guidance = EPC Performance — Synergies — Lower SG&A Expenses = Price vs. Inflation Improvement = Cost Reduction Initiatives = LIFO Effect of Lower Copper Spot Costs
Slide 9: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights Adjusted Income from Adjusted Income Operations Percentage Revenue ($M) from Operations ($M) ° of Net Sales $ $58 $727 oe 6.9% $556 $38 2010 2011 2010 2011 2010 2011 ex
Slide 10: Fiscal Year 2011 Financial Highlights
Fiscal Year 2011 Financial Highlights peor Adjusted Income from \justed Income erations Percentage Revenue -_ from _— (SM) ” of Net Sales . a et a 10.6% 11.8% — $238 o- 2011 2010 2011 2010 2011
Slide 11: Financial Highlights
Financial Highlights Capital Expenditures = $13 million in 4Q 2011 = $58 million in 2011 = $110 million est. for 2012 Income Tax Rate = 30.4% ETR in 4Q 2011 = 30.2% ETR in 2011 = 30% - 31% ETR est. for 2012 Free Cash Flow = $76 million FCF in 4Q 2011 + 231% of Net Income = $208 million FCF in 2011 +
Slide 12: First Quarter 2012 Guidance
First Quarter 2012 Guidance EPS Guidance of $1.07 to $1.13 = Includes EPC Results = Continued Strength in C&l, Mechanical, Unico and India Partially Offsetting Weakness in HVAC and China = Productivity and Pricing Offsetting Cost Inflation = Excludes Impact of Recent Milwaukee Gear Acquisition "
Slide 13: Operations Update — Fourth Quarter Sales
Operations Update — Fourth Quarter Sales Mechanical Up 8.5% North American Commercial & Industrial Up 5.1% from Continuing Operations NA Residential HVAC Sales Decreased 16% Sales Outside US Up 25% Sales Outside US Exceeded $1B for FY 2011
Slide 14: Operations Update - New Products
Operations Update -— New Products = Energy Efficient Sales Up 18% = 50 New Products in 2011 = 20 New Products In 4" Quarter
Slide 15: New Products - Variable Speed Hermetic Motor
New Products —- Variable Speed Hermetic Motor = High Efficient Permanent Magnet Motor = Variable Speed = Used in Air Conditioning Systems Up to 5 Tons = 80%+ Improvement in SEER Rating a so “
Slide 16: New Products - ECM Air Circulating Fan
New Products - ECM Air Circulating Fan = Wide Variety of Commercial and Industrial Applications = High Efficiency Fan Blades = High Efficiency ECM Motor m Payback ~ 2 to 3 Years a so
Slide 17: Commercial HVAC Retrofit
Commercial HVAC Retrofit = Large Retrofit Opportunity = Provides 2.5 year Payback = 1st Phase of Chrysler Building Completed
Slide 18: Unico's Linear Rod Pump (LRP)
Unico’s Linear Rod Pump (LRP) = 4th Quarter Unico Sales Up 55% or $10 million = First LRP Installations in The Congo, UK and China = Exciting Technology and Growing Customer Interest et a
Slide 19: Operations Update
Operations Update = Incremental Warranty Expense Reduction = Restructured Operations In Australia and Europe = Brand Simplification - EPC HVAC and Hermetic to Genteq — Pump and General Industry to Century = EPC Integration Progressing Well
Slide 20: Milwaukee Gear Acquisition
Milwaukee Gear Acquisition Sales by Appl n Est. 2012 Revenues Trane. $% S60ME: ining $% Gen nnaustias 10% Revenue Growth 8-Year CAGR 15.5% EBITDA Margins Similar to | "Leading Manufacturer of Highly Engineered Gearing RBC Mechanical Segment | ® Strong Presence in the Growing Oil and Gas Space Fleet
Slide 21: Operations Summary
Operations Summary = Solid Quarter = Diversification Strategy Pays Dividends = Regal - The Preferred Choice For Our: — Customers — Employees — Shareholders
Slide 22: Summary
Summary = Results Exceeded Guidance = Executed on Initiatives and Integration Activities = Reduced Incremental Warranty Expense = Stream of New Product Introductions Focused on Energy Efficient Solutions for Customers = Welcome Milwaukee Gear = Continuing to Generate Strong Free Cash Flow for Debt R
Slide 23: Questions and Answers
? Questions and Answers
Slide 24: Thank You
? Thank You
Slide 25: APPENDIX — Non-GAAP Measures
APPENDIX — Non-GAAP Measures Dollars in Thousands, Except Per Share Data EPC Purchase Accounting Adjustments and Acqui Incremental Warranty Accrual Gain on Divestiture Restructuring Costs ‘Adjusted Diluted Earnings Per Share GAAP Gross Profit EPC Purchase Accounting Adjustment Incremental Warranty A
Slide 26: APPENDIX — Non-GAAP Measures
APPENDIX — Non-GAAP Measures Dollars in Thousands, Except Per Share Data GAAP Income from Operations EPC Purchase Accounting Adjustments and Acquisition Costs Incremental Warranty Accrual Gain on Divestiture Restructuring Costs Adjusted Income From Operations Adjusted Income From Operations as a Per
Slide 27: Thank you
= SREGAL wp BELOIT | Thank you